Ghana has reportedly taken delivery of the first consignment of 40 Million metric tons of oil from the United Arab Emirates under the ‘Gold for oil’ policy.
Accra-based Citi FM reports that, the consignment arrived at the Tema Port on Sunday, January 15, 2023, according to the Ministry of Lands and Natural Resources.
The distribution and processes are expected to be handled by the Energy Ministry, the Bulk Oil Storage and Transportation and Oil Marketing Companies.
Government expects that fuel prices will reduce with this initiative since the amount of dollars spent in importing the product will reduce. Ghanaians have in recent months battled with rising fuel cost.
The Policy
The Vice President, Dr. Mahamudu Bawumia, hinted at the arrival of the first oil under the policy last week. Dr. Bawumia in 2022 announced the plan to purchase oil from the UAE using gold to keep the country’s forex.
Although some had criticized the policy and doubted its sustainability, government says there are measures in place to sustain it.
What Bawumia said about the policy
Speaking at the 2022 AGI Awards in Accra, Dr. Bawumia noted that Ghana’s gold for oil program will give Ghana the space to accumulate more international reserves. According to him, the country will save the $3 billion it spends on oil imports.
He added that the use of gold was specifically for oil imports in the face of declining foreign exchange reserves.
“Unfortunately some people have misinterpreted this as Ghana being against the use of the US dollar in international transactions. Far from it. We want to accumulate more US dollar reserves in the future.”
Dr. Bawumia noted that a major source of cedi depreciation has been the demand for forex to finance the import of oil products.
“If we implement the gold for oil policy as it as envisioned, it will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency with its associated increases in fuel, electricity, water, transport and food prices.”
This, he noted, is because the exchange rate (spot or forward) will no longer directly enter the formula for the determination of fuel or utility prices since all the domestic sellers of fuel will no longer need foreign exchange to import oil products.
