1. With the delivery of the first consignment of around 40,000 metric tons of diesel, worth nearly US$40 million, on January 15, 2023, the government's Gold for Oil (G4O) program was put into action.
2. The main goal of the program is to use additional foreign exchange resources from the Domestic Gold Purchase (DGP) program of the Bank of Ghana to provide foreign currency for the nation's importation of petroleum products, which is currently estimated to cost about US$350 million per month.
3. There are two ways to pay for oil supply: either through a barter trade in which gold is swapped for oil or through a broker channel in which the gold is transformed into dollars and paid to the supplier.
4. The initial delivery of 40,000 metric tons of diesel accounts for around 10% of the nation's monthly demand for both gasoline and diesel.
5. By March 2023, imports under G4O are expected to account for almost half of the nation's entire demand for gasoline and diesel.
6. The G4O's adoption will relieve pressure on the dollar, which is the currency used to import petroleum goods, and prevent the sporadic spikes in petroleum prices brought on by the cedi's devaluation against the dollar.
7. The program will make sure that buying goods from foreign oil dealers is comparably less expensive.
8. Lower pump prices in the nation will result from the resulting decrease in foreign exchange pressures, premiums imposed by foreign oil dealers, and efficiency improvements from the value chain.
9. The National Petroleum Authority (NPA) shall control the pricing of the goods in the interim until the quantities considerably increase to guarantee that the price of petroleum products imported under the G4O program reflects at the pumps to benefit the customer.
10. To make sure that the landed cost of goods purchased under the program is constantly competitive, NPA will collaborate with Bulk Oil Storage and Transportation Company Limited (BOST) to negotiate prices with international oil merchants.
11. The NPA will provide its approval for the amount that BOST would charge bulk import, distribution, and export companies (BIDECs) for the goods. The NPA will also authorize the price at which the BIDECs will sell the goods to Oil Marketing Companies (OMCs).
12. The appropriate exchange rate used to determine the price of the goods delivered under G4O shall be based on the typical price at which BoG acquired the gold from authorized gold exporters. Typically, the Precious Minerals Marketing Company aggregates the gold and sells it to the BoG. (PMMC)
13. The NPA will implement steps to guarantee that OMCs that lift goods provided under the G4O program pass the price on to customers appropriately. BIDECs and OMCs that lift and provide G4O products shall sell at the NPA-determined ex-refinery and ex-pump pricing. If products from G4O and other sources must be mixed, a weighted average will be used to determine ex-refinery and ex-pump pricing.
14. To participate in the acquisition and sale of G4O goods, BIDECs, and OMCs will all need to sign an undertaking indicating their readiness to abide by the program's terms and conditions.
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