Govt told to consult broadly on gold-for-crude oil move

The Government of Ghana has been told to consult widely on the decision to purchase crude oil with gold.

Speaking on this matter on the Ghana Tonight show with Alfred Ocansey on TV3 Tuesday November 29, Energy expert Mr Kojo Poku indicated that there has not been stakeholder engagement on this move.

He said “Policy credibility is very key. You can count the number of policies that government has said they would do that civil society had come out to say that it is not possible, it is not going to happen that has happened. There is none.

“I don’t even think you can come out with any. Government said they were going to do Agyapa, civil society said it wasn’t going to be possible and Agyapa was not done. GNPC said they were going to do Aker but we said it wasn’t going to be possible to do it and they couldn’t do Aker. PDS, we said it wasn’t going to last, it did not last. We in civil society have a track record in analyzing government policies and telling government that if we do not do extensive and proper engagement this policy will not work and they don’t listen, they go ahead.

“This seems to be one of those policies. I don’t know who in the energy sector that Dr Amin Antah [Deputy Minister of Energy] said they have engaged but I can assure you that they have not engaged any one within our space, within the civil society space.

“I speak to quite a number of them and none of them has been engaged. My little investigation I have done shows that it was an initial discussion at the NPA level and nobody knows why it ended up on the Facebook page of the Vice President.”

On the issue of consultation, the Governor of the Bank of Ghana (BoG) Dr Ernest Addison has said that the major mining companies operating in Ghana were involved in discussions on the move.

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Dr Addison said that in the meeting where this idea came up, the major mining companies including Newmont and AngloGold were all present.

They all cooperated with this idea, Dr Addison added.

Answering questions at the Monetary Policy Committee (MPC) meeting at the BoG headquarters in Accra on Monday November 28, he said “the major mines were consulted, Newmont and the Anglogold were all part of the meeting that we had together with the Vice President when the decision was taken that they will, from 2023, sell at least 20 per cent of their production of gold to the central bank.

“In fact, most of the mining companies who were at that meeting were very cooperative, it was not something which was forced on them, they were ready to contribute their quota to support Ghana during these difficult times.”

Dr Addison further indicated that the Precious Minerals Marketing Company (PMMC) will play a key role in the move to buy crude oil with gold.

The PMMC, he said, will be buying a lot of the gold from licensed gold exporters who he indicated, have significant amount of gold.

“The PMMC will be providing most of the gold to be used for crude oil swap,” he said during the Monetary Policy Committee (MPC) press conference in Accra on Monday, November 28.

The Vice President Dr Mahamudu Bawumia has however stated that some analysts and commentators have misinterpreted Ghana’s stated policy of using gold reserves to pay for oil as an attempt by the country to move away from the US dollar for international transactions.

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Speaking at the 2022 AGI Awards in Accra, Dr Bawumia noted that to the contrary, Ghana’s gold-for-oil programme will give Ghana the space to accumulate more international reserves as the country will save the $3 billion it spends on oil imports.

He further stated 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,” he stated.

“Far from it. We want to accumulate more US dollar reserves in the future.”

Vice President Bawumia noted that a major source of Cedi depreciation has been the demand for forex to finance imports of oil products and to address this challenge, government is negotiating a new policy regime where sustainably mined gold will be used to buy oil products.

If we implement the gold-for-oil policy as it is 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 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

By Laud Nartey||Ghana