Deep throat sources within the downstream petroleum industry and familiar with the gold-for-oil policy has revealed to norvanreports, the per litre cost of both diesel and petrol sold by BDCs to OMCs under the gold-for-oil policy for onward sale to the public.
Information reaching norvanreports indicates that a per litre cost of diesel and petrol cost for OMCs under the gold-for-oil policy costs GHS 10.10 pesewas and GHS 9.60 pesewas respectively.
This is higher than the per litre cost of GHS 9.50 pesewas and GHS 9.10 pesewas for diesel and petrol sold to OMCs not participating in the policy.
In view of the above information, one can confidently assert that, rather than aiding to reduce the burden of high fuel prices at the pumps, the gold-for-oil policy is rather adding to the cost of fuel prices at the pumps, making Ghanaians worse off.
The high cost of diesel and petrol sold to OMCs under the policy as against those not operating under the policy, therefore contradicts assertions by the government and particularly, Vice President Dr Mahamudu Bawumia that the gold-for-oil policy has led to reductions in the prices of fuel and is expected to lead to further decline in fuel prices at the pumps.
At the moment, the decline in fuel prices industry experts notes can only be attributed to two main factors namely; the significant reduction in the international market of crude oil price and the relatively sustained stability of the cedi over the past few weeks.
At the moment, the decline in fuel prices industry experts notes can only be attributed to two main factors namely; the significant reduction in the international market of crude oil price and the relatively sustained stability of the cedi over the past few weeks.
Gold-for-Oil: Potential losses by BOST under policy envisaged
The Bulk Oil Storage and Transportation Company Limited (BOST) in Ghana is expected to face potential losses under the government’s gold for oil policy, according to the Executive Director of the African Centre for Energy Policy (ACEP), Benjamin Boakye.
Boakye has raised concerns about the import cost of fuel under the policy, which he argues is higher than the cost at which Bulk Distribution Companies (BDCs) in the country purchase fuel from BOST under the programme. As a result, BDCs are likely to undercut prices from BOST, causing losses for the company.
These assertions come amidst an anticipated decline in fuel prices at the pumps, expected to range between 3% and 10% starting from March 16, 2023. However, Boakye has argued that this decline is not due to the government’s gold for oil policy.
Instead, he attributes it to the reduction in oil prices on the international market, with Brent and WTI falling to $73 and $66 per barrel respectively. Boakye also notes that the relative stability in the cedi supports the decline in fuel prices.
Boakye’s statement contradicts that of the Vice President of Ghana, Dr Bawumia, who claims that the anticipated decline in fuel prices is due to the government’s gold for oil policy, which he further asserts that, will result in foreign exchange earnings of over $4.8bn for the country.
The potential losses for BOST and the contradicting statements from Boakye and Dr Bawumia raise concerns about the impact of the gold-for-oil policy on the Ghanaian economy. While the policy aims to boost foreign exchange earnings for the country, it is essential to consider the impact on BOST’s financial viability and the potential implications for Ghana’s fuel prices.
Moreover, the government needs to consider the concerns raised by industry experts and conduct thorough analyses to determine the best approach for balancing the country’s economic goals and BOST’s financial sustainability. These analyses should include the impact of the policy on BOST’s operational costs and the potential competition from BDCs. Additionally, the government should consider exploring alternative ways of boosting foreign exchange earnings, such as diversifying the country’s export base or investing in other sectors.
As Ghana seeks to advance its economic growth and development, it is crucial to have a comprehensive understanding of the implications of policy decisions on the country’s industries and economy as a whole. Only then can the government make informed decisions that balance the interests of all stakeholders and foster sustainable economic growth.
Norvanreport