Golden Oil 4: The Truth About Policy
The government last year announced a new policy called Gold for Oil (G4O) to help address fuel price adjustments and stabilize the local currency’s depreciation.
The program is a government initiative to utilize the existing Bank of Ghana (BoG) Domestic Gold Purchase Program (DGP) to support the importation of petroleum products into Ghana.
According to the government’s G40 Program Framework dated February 3, 2023, the main objective of the program is to use additional sources of foreign exchange from the DGP BoG program to provide foreign currency for the import of petroleum products for the country which is currently around $350. million each
month.
The government has started the implementation of the G4O Program where the purchase of gold under the DGP BoG Program is mainly through the Precious Minerals and Marketing Company (PMMC) and if required from aggregators and mining companies are used to purchase petroleum products.
This is meant to free up foreign exchange resources to meet the country’s petroleum imports thereby reducing the pressure on the Bank of Ghana’s foreign reserves and the banking sector which comes from the Bulk Import, Distribution and Export Company.
(BIDECs) requests for foreign exchange.
The program also aims to procure petroleum products at competitive prices through Government-to-Government (G2G) arrangements. The program will ensure that the cost of importing products from international oil traders will always be lower.
The resulting reduction in foreign exchange pressure, the reduction in premiums charged by international oil traders as well as the efficiency gains from the value chain will reduce the price of used pumps in the country.
According to a document found on DGN Online, G4O, “Under the program, all gold ore produced and exported by licensed small-scale concession companies including community mines through PMMC will be purchased by the BoG. The Ministry of Land and Natural Resources has issued a directive for the realization of the program.
“The gold ore purchased is used to pay for oil supplies to Ghana. Payments for oil supplies must be made in two channels: by way of barter trade or through broker channels.
The move, which was announced by the Vice President Dr. Mahamudu Bawumia in the midst of the depreciation of the cedi against the US dollar and the increase in fuel prices, explained as an intervention to help stabilize the price of fuel products, as well as reduce them. pressure on Ghana’s foreign exchange, as direct gold barter will be a way to pay for imported oil instead of depleting foreign exchange reserves.
The Gold for Oil program began to be implemented with the first oil consignment arriving last month.
According to the government’s G40 Program Framework that explains the policy, payments for oil supplies are made in two channels; barter trade or through forex obtained from selling gold to a broker.
In the Barter Channel, suppliers willing to take gold in direct exchange for petroleum products will be provided with the same volume of gold as the Bank of Ghana (BoG).
“Banks and International Oil Trading Companies (IOTCs) should open Gold Metal Accounts at agreed gold refineries for the purpose of gold transfer,” the framework said.
“BoG collects refined gold in the metal account at the refinery designated by the supplier to finance the shipment of petroleum products. BoG transfers the equivalent amount of gold based on the petroleum product supply invoice from the metal account to the supplier’s metal account upon receipt of the Quality Certificate (QC) of the supplied product and the final invoice from the Bulk Oil Storage and Transportation Company (BOST).
Please find a copy of the document attached below
By Vincent Kubi
The post Gold Oil 4: The Truth About The Policy appeared first on DailyGuide Network.
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