Dr. Patrick Kwaku Ofori, the CEO of the Ghana Chamber of Bulk Oil Distributors, has expressed concerns about the government’s gold for oil policy, which he believes has put bulk oil distributors in a difficult position, competing directly against the government.
This policy was implemented as a strategic move by the government to address the shortage of foreign exchange in the country.
The purpose of the gold for oil policy is to allow the government to exchange gold for oil directly, without relying on foreign currency, especially the dollar, in order to manage inflation in the country.
Dr. Ofori in an interview with Citi Business News discussed the impact of this policy on the oil distribution industry, emphasizing that it will have a negative effect on the revenue generation of the regulators.
He argued that the distributors who have already paid their license fees did not anticipate being subjected to such constraints.
Dr. Ofori further highlighted the importance of creating a favorable business environment for the private sector, as these entities contribute to employment and tax revenue.
He acknowledged the complexity of the situation and noted that the program has affected private sector participation in terms of accessing the revenue from gold purchases.
In light of these concerns, Dr. Ofori suggested that “the government should consider modifying its policy to allow for private-sector engagement.”
“It’s a bit of a tricky situation there, and the programme obviously impacted on private sector participation judging from how the private sector can also assess the proceeds of the revenue coming from the gold purchases.”
“But if government intends to change their policy regarding the gold for oil and allow private sector participation and say that ‘well as a country, we’re going to use maybe a percentage of all the revenue we generate from maybe gold export to finance our refined product importation. And by so doing, either through the Central Bank reactivating the forex option so that both the private sector and the public entities who are interested in importing refined products can go through those competitive processes to be able to have the product.’”
Additionally, Dr. Ofori mentioned an alternative option, whereby the Bank of Ghana would surrender all gold proceeds and revenue to ensure the availability of foreign exchange for commercial banks, thereby granting importers access to these funds.