BOST MD: Gold for oil policy will restore Ghana’s credibility on the market

The managing director of the Bulk Oil Storage and Transportation Company Ltd (BOST), Edwin Provencal, has said the gold for oil policy will help restore Ghana’s credibility on the international market.

The gold for oil policy is expected to change Ghana’s balance of payments position fundamentally and significantly reduce the depreciation of the cedi.

Some experts, including a former chief executive of the National Petroleum Authority (NPA), Alex Mould, have kicked against the policy, saying it is surplus to requirements.

However, appearing on the Asaase Breakfast Show on Monday (13 February), Provencal said the policy is strategic.

“Initially, we used to have open credit accounts with suppliers,” Provencal said. “It means that they give you the products and after a while you pay them without any instrument [but] because of the past we abused it and went into debt.

“And so, we lost credibility in the marketplace, and we are restoring that credibility. So, I believe strongly that as we deliver this mandate, we will be able to meet the mandate of being a strategic reserve holder.

“And the third is to import petroleum products to ensure fuel security and export same to neighbouring countries to improve our fortunes,” he said.

Listen to Edwin Provencal in the audio clip attached below:

Watch the full interview in the video clip attached below:

The deal

In November 2022 the Government of Ghana, through the vice-president, announced plans to buy oil products with gold rather than US dollars.

Vice-President Mahamudu Bawumia said the gold for oil policy was meant to tackle dwindling foreign currency reserves as well as the demand for dollars by oil importers, which was weakening the cedi and increasing the cost of living.

“It will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency,” Bawumia said.

He added that using gold would prevent the exchange rate from having a direct impact on fuel or utility prices, as domestic sellers would no longer need foreign exchange to import oil products.

Fred Dzakpata

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