Government has discontinued the gold for oil programme
The Bank of Ghana has confirmed that a total loss of GH¢2.14 billion was incurred under the Gold for Oil (G4O) programme in 2023 and 2024.
According to a myjoyonline.com report, this was contained in a formal response to a request for information filed by NPP member and energy analyst, Kwadwo Poku, under Article 21(1)(f) of the 1992 Constitution and Section 18 of the Right to Information Act, 2019 (Act 989).
The BoG confirmed that GH¢320 million was lost in 2023 and a further GH¢1.82 billion in 2024.
The bank further explained that “the losses incurred were primarily on gold and petroleum transactions. Loss on gold transactions amounted to about GH¢1.80 billion, which were mainly due to exchange rate differentials; the exchange rate used in the local gold market for gold purchases and the Bank’s internal rate.”
It also cited losses on petroleum trading, which amounted to about GH¢340 million, which were mainly due to a large stockpile prior to a sharp decline in world market fuel prices.
On whether the programme had any impact on the foreign exchange market, the bank said; “The G4O initiative had a positive impact on the foreign exchange market and ex pump fuel price in the first year (2023)of its implementation.”
It also noted that the program helped reduce demand for US dollars from the Bulk Oil Distributors (BDCs).
“A total FX demand of $1.66 billion would have otherwise increased demand
on the interbank FX market and put pressure on the exchange rate to cover the
delivery of 56 cargoes totalling over 1,847,000 metric tons of petroleum products as at the close of December 2024,” it added.
The BoG also noted that prior to the G4O Initiative, petroleum suppliers were charging petroleum premiums between $150 and $170 per metric ton.
“Petroleum premium declined significantly and ranged between $50-$80 per metric ton due to competition from the G40 Initiative. This competition among market players led to lower ex-pump prices. The G4O initiative eliminated the use of the forward exchange rate in pricing petroleum products, which contributed to moderating price increases at the pump,” the BoG added.
However, the Central Bank said it exited the programme in line with the conditionalities of the International Monetary Fund.
“As a consequence of the Bank’s decision to exit the G40 programme, a new framework will be put in place to shorten the cash cycle and cede the business of trading and financing of fuel to BOST and its bankers,” it added.
SSD/AE
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