Gold 4 Oil programme from Jan. 1: BoG to buy 20% refined gold …from mining companies for purchase of oil for Ghanaian market

All large scale mining companies in the country are to from January 1 next year, expected to sell 20 per cent of all refined gold at their refineries to the Bank of Ghana (BoG).

The purchase would be made in Ghana Cedis before the export of the gold.

This forms part of measures by government to ease the pressure on the Ghana Cedi through its “Gold 4 Oil” programme, aimed at purchasing oil for the Ghanaian market with gold produced in the country.

A statement signed and issued in Accra on Wednesday by the Minister of Lands and Natural Resources, Samuel Abdulai Jinapor, tasked the BoG and the Precious Minerals Marketing Company (PMMC) to coordinate with the large scale mining companies to ensure compliance with the directive.

Also, it noted that, all Licenced Small Scale Gold Miners and Community Mining Schemes (CMS) were also to mandatorily sell their gold outputs to government through PMMC in support of the programme.

“All small scale gold mining licences and Community Mining Schemes (CMS) licences shall include a clause mandating licensees to sell their gold to government,” the statement added.

The gold to be purchased by the Bank of Ghana and the PMMC, it said, would be at spot price with no discounts.

The directives, according to the statement, was in exercise of government’s pre-emptory right under section 7 of the Minerals and Mining Act, 2006 (Act 703), and the powers conferred on the Minister responsible for Mines by section 100(1) of Act 703.

It asked the Minerals Commission and PMMC to work with all gold mining companies, both large and small scale, to ensure strict compliance with the directives.

The Vice President, Dr Mahamudu Bawumia, on Thursday, announced on Facebook that the country is developing a new strategy that would see it purchase oil products using gold rather than U.S. dollar reserves.

He stated that the decision was intended to address Ghana’s declining foreign exchange reserves and the demand for dollars from oil importers, a situation that had drastically weakened the Ghana Cedi and driven up living expenses.

The Vice President said that since domestic vendors would no longer require foreign currency to import oil products, using gold would prevent the exchange rate from directly impacting the cost of fuel or utilities.

The demand for foreign exchange by oil importers in the face of dwindling foreign exchange reserves, he explained, results in the depreciation of the cedi and increases in the cost of living with higher prices for fuel, transportation, and utilities, among others.

“If we implement it as envisioned it will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency with its associated increases in fuel, electricity, water, transport, and food prices.

This is because the exchange rate (spot or forward) will no longer directly enter the formula for the determination of fuel or utility prices since all the domestic sellers of fuel will no longer need foreign exchange to import oil products.

If implemented as planned for the first quarter of 2023, the new policy will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency,” Dr Bawumia said.


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