Vice President of Ghana, Dr Alhaji Mahamudu Bawumia says the government will save US$4.8 billion annually in foreign exchange for the successful implementation of the "Gold for Oil" policy.
According to Dr Bawumia, the policy is an important macroeconomic intervention the Government rolled out last year to deal with the balance of payments crisis, exchange rate depreciation and hikes in fuel prices, utility, transport fares and food items.
At the commissioning of the new Head Office of Bulk Oil Storage and Transportation (BOST) Company on Wednesday, 15th March 2023 at South Legon in Accra, Dr Bawmumia said the policy enables oil importing firms and bulk distribution companies (BDCs) to use gold rather than the US dollars to buy petroleum products.
"This policy will reduce our need for forex by about USD4.8 billion annually and result in significant savings on the prices at the pump," he said.
He said the policy was an innovative and progressive one that enabled the Government to stem the tide on the spiralling rate of the forex.
“It became imperative to adopt the policy last year when Ghana was facing a balance of payment challenge with the foreign exchange reserves at the Bank of Ghana dwindling, while oil importing companies needed forex to import petroleum products”.
Vice President Bawumia said, currently, 50 to 60 per cent of the country's oil import was from the "Gold for Oil" policy and was expected to hit 100 per cent by the end of 2023.
"Ghanaians should look forward to more of these innovations as we bring the economy back to life," he assured.
The policy was adopted at a time when the exchange rate was depreciating at an alarming rate, which translated into an increase in prices of fuel products at the pumps and subsequent hikes in transportation fares and food items.
"So, we have to think outside the box, outside the text book, to see how to prevent Ghana from getting into the situation where we're unable to buy fuel," Dr Bawumia stated.
Since Ghana could count on gold, which was a foreign exchange asset, government decided to use the cedi to buy the gold and replace it with the dollar to trade for the oil.
"The Gold for Oil was the first policy to address the balance of payment crisis. This is the most important macroeconomic policy to deal with the exchange rate depreciation, fuel and food inflation crises,” he said.
"The oil importing companies will not go to the Central Bank looking for forex to import oil. This will bring stability in pricing of fuel and savings in foreign exchange.”
In an answer to those who chastised the policy, Dr Bawumia said some had an impossibility mind set, “but for us, with God, all things are possible.”
He commended the Board and Management of BOST for the sterling leadership and commitment to duty.
He expressed the belief that public enterprises could be significant sources of revenue for the Government to support national development programmes if the right leadership were in place.
Mr Ekow Hackman, the Board Chair of BOST, recounted some of the challenges the company inherited in 2017, and mentioned a debt of $624 million, dysfunctional barges and pipelines as well as non-operational depots.
However, with the Board and Management implementing efficient corporate governance programmes, they had turned around the fortunes of the company for the better.
Mr Hackman said, for instance, in 2021, the company posted GHS163 million profit after tax and made a positive impact regarding its operational efficiencies.
It also completed its head office, which started in 2015, at an estimated cost of $39 million.
The office, situated on 7,000 square metres of land at Shiashie in the Greater Accra Region, comprised seven floors, parking space, an executive floor and a cafeteria.
Other ancillary facilities are a kitchenette, two generators, three elevators and underground fuel and water tanks.
Source: Peacefmonline.com
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Its a good idea if this policy is yielding the required results as expected. However its still early days so lets be cautious and be more focus to achieve the 100% impact intended. My other advice is lets move towards refining our gold mined to get more value out of it. We have been mining gold for over 100 years and yet still dont have one decent rifinery to get more out of this natural resource . We need to move towards that. South Africa are ahead of us due to a number of reasons but I believe among them is the ability to refine their natural resources especially the minerals. It is long overdue Ghana . Please wake up and refine your gold , cocoa etc.
Very Lauderdale idea but if measures are not put in place to check smuggling of the fuel into our neighboring countries when the price is cheaper, it shall amount to nothing.
The emphasis is on what the Vice President said: on the one hand, the ability to think outside the box is key to improving our economic circumstances and structures. On the other hand, it will take leadership, political will, and innovation to bridge the gap in our infrastructure deficit. All these skills, capabilities, and competencies are embodied in the NPP Akufo-Addo government. Therefore, Ghanaians would have made a grave mistake if they bought into all the malicious and populist propaganda of the NDC to vote out the NPP government. Then the political and policy-based message of the opposition NDC to do things differently and better is sadly missing from the equation.