When the Vice President, Dr. Mahamudu Bawumia, announced the government’s intention to engage in gold for oil barter, which is to allow it to pay for imported oil products with gold, the news received mixed reactions from political groups and Civil Society Organisations (CSO).
It is trite knowledge that commentaries on political issues are always based on which side of the divide a contributor belongs to. It is unfortunate, but that has been the convention in the body politic, which is not alien to Ghana. We appear to experience the extreme version where political opponents do not see anything good from the other side.
For us, at The Chronicle, we delight in supporting policies that ease the financial burden of Ghanaians, while making life much easier.
The country spends about US$350 million per month to import petroleum products, which comes with the scarcity of the foreign currency to trade with.
It is for the reason of making life easier and the pressure the import of petroleum products puts on the scarce foreign exchange that we supported the government’s gold for oil policy.
We were happy to learn about the arrival of the first consignment of about 40,000 metric tonnes, and the readiness of the Oil Marketing Companies (OMCs) to patronise it.
However, we held one concern, which has fortunately been said to be on the ‘to do list’ of the regulator, the National Petroleum Authority (NPA), according to a statement we published from them in our Monday’s edition of this newspaper.
Our concern was how some unscrupulous industry players may take advantage of the government’s benevolence to cheat the ordinary consumer at the various pumps.
The NPA statement said the implementation of the gold for oil policy would ease pressure on the dollar and avoid the occasional increases in petroleum prices, resulting from the depreciation of the cedi against the dollar.
The release also stated that a consequent reduction in foreign exchange pressures and premiums charged by the international oil traders, as well as efficiency gains from the value chain, will lead to lower ex-pump prices in the country.
The NPA further said that to ensure that the price of petroleum products imported under the G4O programme reflects at the pumps to benefit the consumer, they would regulate the prices of the products in the interim until the volumes increase significantly.
The NPA will work with the Bulk Oil Storage and Transportation Company Limited (BOST) to negotiate prices with the international oil traders to ensure that the landed cost of products procured under the programme are always competitive.
The price at which BOST will sell the products to Bulk Import, Distribution, and Export Companies (BIDECs) will be approved by the NPA. The price at which the BIDECs will sell the products to the Oil Marketing Companies (OMCs) will also be approved by the NPA.
The applicable exchange rate for pricing the products supplied under the G4O will be based on the average rate at which the gold was purchased from the licensed gold exporters by the Bank of Ghana (BoG).
The BoG ordinarily purchases the gold aggregated by the Precious Minerals Marketing Company (PMMC).
The NPA will put measures in place to ensure that the OMCs that lift products supplied under the G4O programme pass the price onto consumers accordingly.
In this respect, the BIDECs and OMCs which lift and supply G4O products will sell at the ex-refinery and ex-pump prices that will be determined by the NPA. If there must be a commingling of products supplied under the G4O and other sources, the ex-refinery and ex-pump prices will be computed using a weighted average.
We have taken note of these assurances from the regulator about putting measures in place to ensure sanity.
We deem it crucial for the NPA to operate with an eagle’s eye because of the smartness of the industry player, whether positive or negative.
For the fact that not all can operate with positive mindset, NPA must try to be a step ahead of the operators at any time.
We will not mince words to say that, the NPA must also watch over itself, as some of these operators may succeed through the connivance of some staff of NPA.