Ghana’s ambitious Gold-for-Oil (G4O) policy is under fire, with the Chamber of Oil Marketing Companies (COMAC) questioning its effectiveness in stabilising fuel prices and addressing the nation’s foreign exchange (FX) crisis.
The initiative, launched in December 2022 and implemented in January 2023, aimed to use Ghana’s gold reserves to import petroleum products without depleting FX reserves.
But two years in, COMAC’s latest report suggests the policy has had minimal impact on key economic indicators, raising concerns about transparency, financial viability, and the role of the Bulk Energy Storage and Transportation (BEST), formerly BOST, in the fuel supply chain.
COMAC’s findings indicate that the G4O program has only covered about 30% of Ghana’s fuel needs, limiting its influence on market trends. While government officials tout the policy as having lowered fuel premiums and inflation, COMAC attributes those reductions to external market forces rather than the policy itself.
The report highlights that global oil prices had already started declining after the initial surge from the Russia-Ukraine war, meaning fuel prices would have fallen even without G4O. Meanwhile, the cedi continues to depreciate despite the government’s strategy of using gold to secure fuel imports.
“The recent increase in pump prices reinforces the theory that the persistent correlation between rising crude oil prices, a weakening cedi, and pump prices remains intact. Exchange rate fluctuations, driven by international market forces, continue to be the dominant factor—a challenge the G4O program failed to address,” COMAC’s report states.
Transparency is another major concern. COMAC criticises the lack of publicly available data on G4O transactions, financial risks, and procurement contracts. The absence of independent audits has fueled speculation that the program may have incurred significant financial losses.
Adding to the skepticism, COMAC notes that some Bulk Import, Distribution, and Export Companies (BIDECs) were able to source petroleum at lower prices than those obtained through the G4O program, raising concerns about the efficiency of government-led procurement under BEST. Fuel imported under the scheme was reportedly left unsold due to pricing mismatches, further straining government resources.
As doubts persist, COMAC is advocating for a full reassessment of the policy, suggesting a transition to a Gold-for-Forex (G4F) model.
This alternative approach would use gold reserves to stabilize FX liquidity rather than directly trading them for petroleum. COMAC argues that such a model would offer a more sustainable method for ensuring FX availability for oil importers while preserving market-driven pricing mechanisms.
The report also recommends structural reforms to address Ghana’s long-term fuel security challenges, including:
- Revamping the Tema Oil Refinery (TOR) to reduce dependence on imported refined petroleum.
- Strengthening fuel storage and distribution networks to prevent supply chain disruptions.
- Conducting independent audits of government-led petroleum initiatives to enhance transparency and accountability.
Without urgent action, COMAC warns, Ghana risks repeating past mistakes where government intervention in the fuel sector led to inefficiencies, financial mismanagement, and supply shortages.
When Vice President Dr. Mahamudu Bawumia championed the G4O policy, he described it as “the most important economic policy change in Ghana since independence.”
He asserted that it would stabilise the exchange rate and save the country approximately $4.8 billion annually, arguing that without it, Ghana’s economy could face collapse.
But as the programme unfolded, critics pointed to insufficient planning and oversight, leaving gaps that could be exploited, leading to inefficiencies and financial losses.
The lack of publicly available data further deepened suspicions about the policy’s transparency and effectiveness.
Now, as Ghana navigates its economic recovery, policymakers face a crucial decision: continue with the Gold-for-Oil model, refine it, or transition to a more sustainable alternative like Gold-for-Forex.
Meanwhile, Energy Minister John Abdulai Jinapor has recently signalled intentions to discontinue the Gold-for-Oil programme, citing transparency concerns and a lack of clarity surrounding its implementation.
