According to Mpraseo Member of Parliament David Ansah Opoku, the National Democratic Congress (NDC) NDC is merely engaging in political games with the Gold-for-Oil initiative.
He recalled that when the Kufuor administration discovered oil in 2007 in commercial quantities, members of the National Democratic Congress (NDC) indicated that Mr. Kufuor had discovered palm oil rather than crude oil.
He believes that they are approaching the gold for oil initiative in the same manner.
His remarks follow Samuel Nartey George, a Member of Parliament for Ningo Prampram, who alleged that the government engaged in nepotism in the Gold-for-Oil program.
Sam George stated that a member of President Nana Addo Dankwa Akufo-Addo's family is acting as their agent in Ghana for the company Litasco, which is acting as an intermediary for the supply of oil to Ghana as part of the program.
He believes that this is concentrating wealth in the President's family's hands.
"You are giving Litasco, a company in which a member of the president's family has an interest, money from the Bulk Oil Distributors (BDCs). On the Big Issie on TV3 on Monday, February 6, he stated, "They are not only incompetent, but they are also inefficient, and they are ripping us off."
He added, "Don't trade gold to get cheap oil; take out the taxes."
He also wondered if the Bank of Ghana had sufficient gold to trade under the program.
However, Ansah Opoku, who appeared on the same show, stated, "The intended purpose is to reduce the pressures on the forex; the program has just started; people are playing politics with it; we know them; they will try and poopoo this initiative when Kufuor found crude oil, they said it was palm oil."
Gold for Oil, a new government policy, was announced by Vice President Dr. Mahamudu Bawumia last year.
According to government explanation, the policy allows the government to barter gold purchased by the Central Bank for oil imports.
As the direct gold barter would be the method of paying for imported oil rather than depleting the foreign exchange reserve, the move, which was announced by the Vice President in the midst of the depreciation of the Cedi against the US Dollar and the rising cost of fuel, was explained as an intervention to help stabilize the prices of fuel products and reduce pressure on Ghana's foreign exchange.
Since then, the Gold for Oil program has been put into action, and the first shipment of oil arrived last month.
The following is the government's explanation of the policy in its entirety:
Introduction:
1. The Gold for Oil (G4O) Program is a government initiative to support the import of petroleum products into Ghana by utilizing the BoG Domestic Gold Purchase (DGP) Program.
2. The primary objective of the program is to use additional resources from the BoG's DGP program to acquire foreign currency for the country's monthly import of approximately 350 million USD worth of petroleum products.
3. The government has begun implementing the G4O Program, in which petroleum products are purchased from aggregators and mining firms and gold purchased through the Precious Minerals and Marketing Company (PMMC) under the BoG's DGP Program.
4. As a result, the Bulk Import, Distribution, and Export Companies (BIDECs) request for foreign exchange will be less of a burden on the Bank of Ghana's foreign reserves and the banking sector. This will free up resources to pay for the country's petroleum imports.
5. Through Government-to-Government (G2G) agreements, the program also aims to acquire petroleum products at extremely competitive prices. The program will guarantee that importing goods from international oil traders will always be significantly less expensive.
ALSO READ: Dennis Aboagye Miracles goes on a tour of the Northern Regions 6 with Dr. Bawumia. Lower ex-pump prices will result from a reduction in foreign exchange pressures, a reduction in premiums charged by international oil traders, and efficiency gains from the value chain. The G4O Program's Requirements and Process Flow:
7. The BoG will purchase all dore gold exported by companies with licensed small-scale concessions, including community mines through the PMMC, as part of the program. The Ministry of Lands and Natural Resources has issued instructions for the program's implementation.
8. The oil supply to Ghana is paid for with the purchased dore gold. There are two ways to pay for oil supplies: through the broker channel or barter trade.
The Way to Trade:
• BoG will supply an equivalent quantity of gold to suppliers who are open to trading gold for petroleum products. For the purpose of gold transfer, both the Bank and the International Oil Trading Companies (IOTCs) are required to open Gold Metal Accounts in a gold refinery that has been mutually agreed upon.
• In order to pay for shipping petroleum products, BoG stores refined gold in its metal account at a refinery chosen by a supplier.
• On receipt of the final invoice from Bulk Oil Storage and Transport Company (BOST) and the Quality Certificate (QC) for the product supplied, BoG transfers an equivalent amount of gold from its metal account to the metal account of a supplier. The Channel of Brokers:
• BoG enters into a Gold Supply Agreement with a gold broker, pursuant to which it sells gold and provides forex cover to pay for petroleum products.
• Gold Broker deposits funds into a BoG gold holding account after purchasing dore gold from BoG.
ALSO READ: • BoG transfers funds from a gold holding account to an escrow account in order to pay for the shipment of petroleum products upon receipt of QC and the final invoice from BOST. Governor Addison receives praise from the Governor of the Bank of Namibia for the good work that he has done.
9. As an offtaker for petroleum products, BOST, a state company, enters into an agreement with IOTCs to import petroleum products to Ghana for sale to licensed BIDECs.
10. BIDECs purchase directly from BOST using cash or a reputable financial institution's letter of credit (guarantee).
11. The Cedi proceeds from the sale of imported petroleum products are collected and deposited with a collection bank in BoG's favor by BOST and the National Petroleum Authority (NPA). The collection bank is required to transfer the collected funds into BoG's G4O proceeds account within 48 hours, where they are used to fund the subsequent gold purchase cycle.
Products' Prices:
12. The NPA will regulate the prices of petroleum products in the interim to correct market failure until the policy matures to ensure that the price of petroleum products imported under the G4O program reflects at the pumps to the benefit of the consumer.
13. In order to guarantee that the landed costs of products purchased through the program are always competitive, NPA and BOST will negotiate prices with international oil traders. The IOTC that will be chosen to supply products to BOST under the program will be approved by the NPA based on how competitive their offers are. After receiving approval from the NPA, BOST will not sign supply contracts.
14. The NPA will approve the price at which BOST will sell the products to BIDECs. The NPA will also approve the price at which the BIDECs will sell the products to Oil Marketing Companies (OMCs).
15. The average rate at which BoG purchased gold from licensed gold exporters will serve as the basis for the applicable exchange rate for pricing the products provided under G4O. The African Youth Adaptation Solutions challenge 16 is open for applications from the Global Center on Adaptation and AfDB. The NPA will implement measures to ensure that OMCs that increase prices for G4O-supplied goods pass those increases on to consumers. In this way, BIDECs and OMCs that lift and supply G4O products will sell them at the NPA's ex-refinery and ex-pump prices. A weighted average will be used to calculate the ex-refinery and ex-pump prices if there must be a comingling of products from G4O and other sources.
17. In order to participate in the purchase and sale of G4O products, all BIDECs and OMCs will be required to sign an undertaking stating their willingness to abide by the program's terms and conditions.
18. The number of BIDECs and OMCs allowed to lift G4O products will be controlled in order to ensure that the G4O program's impact on ex-pump price will be significant and effectively monitored. Payment Methodology:
19. Within sixty days of receiving products from international oil traders, BOST will be required to pay for those items into an Escrow Account at BoG for G4O.
20. Products purchased from BOST must be paid for by BIDECs within 15 days of loading. Either cash or a reputable commercial bank's 15-day letter of credit (LC) will be used to pay for the products.
21. BoG will require BOST to guarantee that payments will be received on the agreed-upon dates and to provide BoG with copies of the LCs from BIDECs for verification.
Allocation of Laycan Space for Product Imports:
22. The NPA will make sure that BOST gets enough laycan slots to import products under the program.
23. Monthly, NPA will inform BOST of the anticipated demand.
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