Gold for Oil deal to reduce cost of importing oil products
The National Petroleum Authority (NPA) has assured the public that the Gold for Oil (G4O) initiative will ensure that the cost of importing products from international oil traders is comparatively cheaper, and will supply 50% of the country’s oil needs by March 2023.
The NPA said in a statement issued on February 5, 2023 in Accra that it would work with the Bulk Oil Storage and Transportation Company Limited (BOST) to negotiate prices with international oil traders to ensure that the landed cost of products procured under the programme is always competitive.
The NPA said in a statement issued yesterday in Accra that it would work with the Bulk Oil Storage and Transportation Company Limited (BOST) to negotiate prices with international oil traders to ensure that the landed cost of products procured under the programme is always competitive.
According to the statement, all Bulk Import, Distribution, and Export Companies (BIDECs) and Oil Marketing Companies that wish to purchase products under the G4O programme must sign an undertaking confirming their willingness to comply with the terms and conditions for purchasing and selling G4O products.
The implementation of the government’s G4O programme, began on January 15, 2023, with the arrival of the first consignment of approximately 40,000 metric tonnes of diesel valued at approximately US$40 million.
The first consignment of 40,000 metric tonnes of diesel represented about 10% of the country’s combined monthly demand for petrol and diesel and is expected to gradually increase imports under G4O to represent about 50% of the country’s total demand for petrol and diesel by March 2023.
It stated that the primary goal of the programme was to use additional foreign exchange resources from the Bank of Ghana’s Domestic Gold Purchase (DGP) programme to provide foreign currency for the country’s importation of petroleum products, which is currently estimated to be around US$350 million per month.
The statement stated that the implementation of the G4O would relieve pressure on the dollar (the currency used for the importation of petroleum products) and avoid the occasional increases in petroleum prices caused by the cedi’s depreciation against the dollar.
It said the programme would ensure that the cost of importing the products from international oil traders would be comparatively cheaper, adding “payment for oil supply is to be done in two channels by way of barter trade where gold is exchanged for oil or via broker channel where the gold is converted into cash and paid to the supplier.”
The statement said lower ex-pump prices in the country would result from lower foreign exchange pressures and premiums charged by international oil traders, as well as efficiency gains from the value chain.
The NPA explained that “all these would ensure that the price of petroleum products imported under the G4O programme reflects at the pumps to benefit the consumer, the National Petroleum Authority (NPA) will regulate the prices of the products in the interim until the volumes increase significantly.
“The price at which BOST will sell the products to bulk import, distribution, and export companies (BIDECs) will be approved by the NPA and the price at which the BIDECs will sell the products to oil marketing companies (OMCs) will also be approved by the NPA,” it added.
Source: Energy Ghana