The previous administration’s flagship initiative, Gold-for-Oil (G40) has recently come under serious scrutiny as the Chamber of Oil Marketing Companies (COMAC) is the latest stakeholder to point out the flaws of the programme.
A report published by COMAC, dubbed “Gold for Oil: A Golden Opportunity or a Costly Gamble” said the initiative was overly touted as the sole solution to the ever-rising fuel prices at the pumps. This, COMAC noted created a false sense of security that G4O was all the answer to the unstable fuel prices.
Introduced in 2022, the government sought to stabilize prices of fuel by reducing the reliance on dollars for the importation of petroleum products. The initiative hence was designed to exchange locally produced gold by purchasing with local currency for petroleum products or selling the gold for forex and using the foreign currency obtained from the sale to buy oil.
COMAC admits the innovative approach of the initiative but insists that Ghana’s persistent fuel price hikes stem from rather deeper economic, structural, and infrastructural challenges.
In its view, COMAC insisted that the G4O policy alone cannot resolve the challenges.
The chamber justified that global fuel prices are influenced by several external factors, including supply and demand fluctuations, geopolitical risks, and refining costs. Since Ghana remains heavily reliant on imported refined petroleum, simply substituting cash with gold in oil transactions does not address these fundamental cost drivers.
“Although the policy aims to stabilize fuel prices, alleviate forex pressures, and bolster the local economy, a closer examination of Ghana’s economic landscape indicates that gold-for-oil transactions alone may fall short of delivering the anticipated relief,” part of the report cited by SKB Journal read.
Other factors, COMAC names as drivers of fuel prices include the zonalization of the policy under its regulatory framework. This arrangement, designed to streamline fuel distribution, the chamber has observed has rather led to stock shortages, bureaucratic delays, and additional transportation costs for Oil Marketing Companies (OMCs), all of which translate into higher consumer prices.
Systems failure of the Integrated Customs Management (ICUMS) meant to facilitate petroleum transactions, the chamber says has been plagued with recurring technical failures. This leads to delays, increased administrative costs, and uncertain fuel supply.
Ghana’s lack of refining capacity, COMAC says further worsens the issue irrespective of the G4O. While the recent addition of the Sentuo Oil Refinery is a step forward, the country remains overly dependent on imported refined petroleum. This exposure to global oil price fluctuations, coupled with exchange rate instability, significantly undermines the goal of achieving stable fuel prices.
Moreover, storage limitations the chamber has observed also pose a critical challenge. Without adequate strategic reserves, the nation is vulnerable to supply disruptions, which contribute to fuel price volatility.
With these challenges, it is the proposal of COMAC that while the G4O may offer temporary relief in forex management, it is far from being a sustainable solution to Ghana’s fuel pricing crisis. Addressing core inefficiencies in the downstream petroleum sector such as currency stabilization, regulatory reforms, infrastructure upgrades, and refining capacity expansion remains paramount in achieving long-term price stability.
“Stabilizing fuel prices at the pump and an efficient supply chain is within our reach, if we adopt strategic innovation, implement coherent policy reforms, and enhance efficiency throughout the downstream petroleum sector. While the gold-for-oil initiative introduces a creative approach, it is not a comprehensive solution,” COMAC says.
