The National Petroleum Authority (NPA) will control the pricing of the items in the interim until the quantities dramatically increase to guarantee that the prices of petroleum products imported under the Gold-for-Oil (G4O) scheme reflect at the pumps to benefit customers.
Additionally, the NPA will collaborate with the Bulk Oil Storage and Transportation (BOST) Company Limited to haggle pricing with foreign oil dealers to maintain the competitiveness of the landed cost of the goods purchased under the program.
According to an NPA statement, "the price at which BOST would sell the items to bulk import, distribution, and export companies (BIDECs) and the price at which the BIDECs will sell the products to oil marketing firms will both be approved by the NPA (OMCs) and will also receive NPA approval."
Exchange rate
“The applicable exchange rate for pricing the products supplied under G4O will be based on the average rate at which the gold was purchased from licensed gold exporters by the 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 OMCs that lift products supplied under the G4O program pass the price on to consumers accordingly." In this respect, BIDECs and OMCs that 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 co-mingling of products supplied by G4O and other sources, the ex-refinery and ex-pump prices will be computed using a weighted average.
The statement said that to participate in the purchase and sale of G4O products, "all BIDECs and OMCs which wish to purchase products under the G4O program will be required to sign an undertaking confirming their willingness to comply with the terms and conditions for partaking in the purchase and sale of G4O products."
Implementation
With the delivery of the first consignment of around 40,000 metric tons of diesel on January 15, 2023, with an estimated value of $40 million, the government's G4O program's execution got underway.
The main goal of the program is to utilize additional foreign exchange resources from the domestic gold purchase (DGP) program of the BoG to cover the country's current monthly import bill of around US$350 million for petroleum goods.
According to the project, there are two ways to pay for oil supply: through a barter transaction in which gold is traded for oil or through a broker channel in which the gold is turned into currency and paid to the provider.
Consignment
According to the statement, the initial shipment of 40,000 metric tons of diesel accounted for roughly 10% of the nation's total monthly demand for gasoline and diesel. The plan was to gradually increase imports under G4O to account for roughly 50% of its total demand for gasoline and diesel by March 2023.
"The G4O's adoption will lessen pressure on the dollar, which is the currency used to import petroleum goods, and prevent the sporadic spikes in petroleum prices."
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