Gold-for-oil: First consignment can last between 10-15 days – BOST

The first consignment of petroleum products delivered under the Government’s Gold for Oil Policy can serve consumers between 10 to 15 days, the Bulk Oil Storage and Transportation Company
(BOST) has said.

The Company confirmed to the Ghana News Agency that it has taken delivery of about 41,000 metric tonnes of petroleum products, valued at about $43 million at the Tema Port.

Marlick Adjei, Head of Communications, BOST, told the GNA that the Company was in the process of completing the necessary protocols to begin discharging the products into its tanks for onward sale to Bulk Distributing Companies (BDCs).

The Government announced the Gold for Oil Policy in November last year as an innovative measure to exchange gold for petroleum products instead of US Dollars.

The Government said the move was intended to reduce the demand for dollars for the importation of petroleum products and by extension reduce the rate of depreciation of the Cedi.

It is estimated that the country required about $400m to import petroleum products monthly.

Adjei said the arrival of the first consignment of petroleum products under the Policy was an addition to existing volumes already being sold to the BDCs.

He said the about 41,000 metric tonnes of petroleum products would serve the country for about two weeks.

“We are assuring Ghana that as and when our projections and mathematics favor the country, the needed consignments shall be arranged and shall be shipped.

“As we come through with the volumes, we expect that in the next couple of weeks, the next ticket shall be also sailing through,” he said.

Asked if the arrival of the first consignment would affect prices at the pumps, Mr Adjei said that would be difficult to determine now.

He said the main goal of the Policy was to ease the pressure on demand for the Dollar, which in turn would help to reduce the depreciation of the Cedi.

“The ex-pump price of petroleum products is the function of the cost of the product, the transportation element and the exchange rate between the Cedi and the Dollar; so anything thing that drives down the exchange rate is most likely to affect the price we will pay at the pumps,” he said.

Meanwhile, the Institute for Energy Security (IES) has indicated that the Gold for Oil deal would not lead to a reduction in prices of petroleum products at the pumps if the Cedi failed to appreciate against the Dollar.

Fritz Moses, Research Analyst, IES, said the Cedi in the last two weeks alone depreciated by about 10 percent against the Dollar.

He said the arrival of the first consignment of petroleum products under the Gold for Oil Policy would not reflect in prices because oil marketing companies would price their products based on the exchange rate.

“Those volumes (of petroleum products) arrived just a few days ago and OMCs are already in contract with the BDCs to deliver products up to a point in time.

“So if the new products hit the market and the Cedi continues to depreciate like we are seeing in the current pricing window, then it will not reflect in prices at the pumps,” Moses said.