Success of “gold for oil policy”: Bawumia and Opoku Prempeh vindicated

Since its introduction, the “gold for oil policy” has stabilised the exchange rate and is expected to save Ghana $4.8 billion annually

The successes so far registered by the government’s innovative gold for oil policy have vindicated arguments made by the vice-president, Mahamudu Bawumia, and the Energy Minister, Matthew Opoku Prempeh.

Dr Bawumia, who has been driving the policy at the presidential level, and Dr Opoku Prempeh, who is the implementation anchor at ministerial level, have persistently drummed home the inherent benefits of the policy and promised that the government will do everything possible to ensure that Ghana reaps maximum benefit from it.

According to Dr Bawumia, since it became operational, the gold for oil policy has stabilised the exchange rate and it is expected to save Ghana approximately $4.8 billion annually.

Also speaking at the 2023 energy sector retreat, Dr Opoku Prempeh declared that his ministry will monitor every link in the gold for oil value chain religiously to ensure that the purposes for which the programme was birthed are not defeated.

Positive effects

The gold for oil policy has been credited as one of the measures that have led to stable fuel prices.

The head of financial markets at the Bank of Ghana, Steven Opata, said the government’s policy had resulted in increased competition among traders of refined petroleum products, leading to reductions in prices at the pump.

As a result of the implementation of the policy, petroleum prices, which were hovering at GHC15 per litre in January 2023 are now roughly GHC12 on average. They are expected to fall further in the coming months.

As of 29 May 2023, the price of petrol in Ghana was about GHC13.2 per litre (roughly $1.192), showing a decrease from prices in December 2022.


The price drop has brought relief to daily motorists, as they are able to work within their budgets.

Moreover, the increases in fares which characterised the year 2022 have died down, bringing relief to passengers.

Furthermore, the drop in fuel prices has had an impact on the decline in inflation, since fuel prices are a major driver in economic activities.

From a high of 54.1% in December 2022, inflation has fallen consistently, reaching 41.2% in April. This signifies a positive outlook for the economy.

Significant step

At a time West Africa’s biggest economy, Nigeria is struggling to deal with surging oil prices.

The oil price surge has led to two states in Africa’s most populous nation, with 221 million people, cutting back the working week to three days a week.

Many experts see Ghana’s gold for oil policy as a significant step towards bringing relief to Ghanaians and driving economic growth.

Policy objective

Implementation of the gold for oil programme began with the arrival on 15 January 2023 of the first consignment of about 40,000 metric tonnes of diesel, valued at roughly US$40 million.

A statement from the National Petroleum Authority (NPA) said the prime objective of the programme is to use additional foreign exchange resources from the Bank of Ghana’s Domestic Gold Purchase programme to provide foreign currency for the importation of petroleum products in Ghana. Currently, these stand at about $350 million per month.

Payment for oil supply is to be done through two channels: by way of barter trade, where gold will be exchanged for oil, or via a broker channel, where the gold is converted into cash and paid to the supplier.

The first consignment of 40,000 metric tonnes of diesel constitutes about 10 percent of the country’s combined monthly demand for petrol and diesel.

According to the NPA, the plan is to gradually increase imports under the programme to constitute about 50% of the country’s total demand for petrol and diesel.

Implementation of the programme will ease pressure on the dollar (the currency used to buy imported petroleum products) and avoid occasional increases in petroleum prices resulting from the depreciation of the cedi against the dollar.

In addition, the programme will ensure that the cost of importing the products from international oil traders will be comparatively cheap.

The consequent reduction in foreign exchange pressures and premiums charged by international oil traders, as well as efficiency gains from the value chain, will lead to lower ex-pump prices in the country.

Outstanding move

The group chief executive officer and managing director of GOIL plc, Kwame Osei-Prempeh, described the policy as outstanding. He said his outfit is benefiting from the deal because the policy is good.

He dismissed allegations in certain quarters, therefore, that the programme has negatively affected some oil marketing and bulk distribution companies.

In an interview with Joy Business at GOIL’s 54th annual general meeting, Osei-Prempeh explained that measures have been put in place by the company shareholders to take advantage of the deal to protect the interests of consumers and partners.

“We are not kicking against it. It has really taken some of our stress, because at a point we needed to push for dollars and all but now it is fine,” he said.

A former group chief executive officer of GOIL, Patrick Akorli, has also described the programme as innovative. Speaking with Citi News, Akorli said the success of the policy will depend on the government’s honesty.

”It is a very innovative [policy],” he said. “What the government is saying is that we need about $400 million almost every year [to get oil]. So, if we have gold and the gold can be exchanged at a given price to get dollars dedicated to the oil downstream market, then at least we are assured that prices will be stable.”

Boost from being top gold producer 

Meanwhile, the gold for oil policy is set to receive a major boost after Ghana recaptured its position as Africa’s biggest gold producer from South Africa.

Industry watchers believe that the increase in gold production shows that the nation is well positioned to pursue the policy, which is seen as a game-changer for Ghana’s economy.

Russia’s war in Ukraine has upended the fragile global economic recovery from the COVID-19 pandemic, setting in motion a crisis that is devastating world energy markets, the United Nations has said.

Consequently, the Government of Ghana has been looking for avenues to overcome these challenges. Experts who spoke to The Thunder over the weekend said Ghana will see a rebuilding of its gold reserves, which will enhance the trading of oil products.

Reuters reported on 9 June 2022 that Ghana had recorded a 32% increase in gold production in 2022, enabling the country to win back the top spot from South Africa as the largest gold producer in Africa.

Ghana lost the position to South Africa in 2021 after a drastic fall in output.

Quoting Joshua Mortoti, the president of the Ghana Chamber of Mines, the report said gold output rose to 3.7 million ounces in 2022 from 2.8 million ounces the previous year, driven by growth in output by both the large- and small-scale sectors.

“The large-scale gold subsector recorded its highest output in the country’s history in 2022,” Mortoti said.

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