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Understanding government’s “Gold for Oil policy” and stakeholder reactions

A UK-based Economist Intelligence Unit (EIU) predicts about 22% depreciation of the cedi to the dollar in 2023, despite a significant appreciation by the end of 2022. According to the Bank of Ghana, the interbank foreign exchange rates used by commercial banks as of January 17, 2023, stood at 10.35 pesewas to a dollar. Over the years, there have been significant depreciations. An exchange rate depreciation is a drop in the value of a currency. 

With Ghana being an import-driven, free-market economy, there is always significant pressure on the Ghanaian cedi. When this happens, the cost of living and prices of goods and services increase. In this vein, the need to find lasting solutions to the cedi depreciation has greatly concerned the government. One of the significant measures the government has taken to salvage this situation is buying gold locally to raise the gold component of its reserves and increase the strength of the cedi. Another is the implementation of the “gold for oil policy.” In this report, DUBAWA gives an explanation of the policy and what stakeholders have had to say about it. 

“Gold for Oil” policy

The government announced the Gold for Oil Policy on Thursday, November 24, 2022. Vice President Dr Mahamudu Bawumia made the announcement on Facebook. According to the government, the move which took effect this year seeks to buy oil products with gold rather than U.S. dollar reserves. This policy is expected to strengthen the cedi against the U.S. dollar. 

In the post, Dr Bawumia said, “If the policy is implemented as planned for the first quarter of 2023, the new policy will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency.” 

He added that using gold would prevent the exchange rate from directly impacting fuel or utility prices as domestic sellers would no longer need foreign exchange to import oil products.

On Monday, January 16, 2023, Ghana took delivery of the first consignment of 40,000 metric tonnes of oil from the United Arab Emirates as part of the policy.

At the Tema Port, the consignment was discharged into the receptacles of Bulk Oil Storage and Transportation Company (BOST). It is expected that BOST will sell the petroleum product, valued at $40 million, to bulk distributing companies (BDCs).

Source: National Petroleum Authority (NPA).

Stakeholder reactions to policy

After the policy announcement, key stakeholders have been reacting to the development. While some describe it as premature, others think the move is laudable. Patrick Akorli, a former Group Chief Executive Officer of Ghana Oil Company (GOIL), lauded the initiative but urged the government to be transparent with the policy. 

For Bright Simons, the Vice President of the policy think tank IMANI Africa, the successful arrangement to barter gold for oil will not necessarily lead to less cedi depreciation against the U.S. dollar nor to lower prices at the pump for consumers. According to him, everything depends on the honesty of the government. 

Former Chief Executive Officer (CEO) of the Ghana National Petroleum Commission (GNPC), Alex Mould says, on the other hand, the policy will create chaos among key industry players. According to him, the government’s failure to be transparent to industry players won’t create a  fair playing field now that it has commenced the policy. 

In the opinion of the Executive Director of the Africa Centre for Energy Policy (ACEP), Benjamin Boakye, Ghana’s gold and oil value chain will be turned over to politicians to control. For him, the government has not been forthright with the cost of the structure. 

Will the policy help reduce prices on fuel? 

Vice President Dr Bawumia said the policy would see Ghana getting cheaper fuel in exchange for gold. The policy is expected to push fuel prices further down after the recent reduction at the pumps.

The Executive Secretary of the Chamber of Petroleum Ghana (COPEC), Duncan Amoah, says the lack of a policy document makes him doubt if the policy could reduce fuel prices at the various pumps.

The Chief Executive Officer of the Association of oil marketing companies, Kwaku Agyemang Duah, says that, although it supports the government’s gold for oil policy, it doubts it would be able to bring some reduction in the price of fuel at the pumps.


With the policy already in operation, it remains to be seen whether the objectives for which it was introduced will be met in the coming months.

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