Naysayers Cast Doubt On Bawumia’s Gold-For-Oil Deal

The laudable policy by government to exchange Ghana’s gold with crude oil is receiving mixed reactions, with some civil society organizations (CSOs) wading in the discussion and casting doubt over it.

Even before discussions could be advanced, they claimed the policy, which was first announced by the Vice President, Dr. Mahamudu Bawumia, will flop because government has failed to engage important stakeholders.

The otherwise laudable policy had been mooted as a result of government’s inability to raise enough US dollars for international transactions, especially crude oil.

However, Energy expert Kwadwo Nsafoah Poku believes the government is embarking on a wild goose chase and this is not the first time.

Speaking on TV3’s Ghana Tonight news analysis show, monitored by The Anchor,the chief executive officer and founder of FKP & RALD Investment Ltd listed a chunk of similar policies and programmes to buttress his point which, he claimed, had all ended nowhere.

He asserted, “Policy credibility is very key. You can count the number of policies that government has said they would do that civil society had come out to say that it is not possible, it is not going to happen that has happened. There is none.”

“I don’t even think you can come out with any. Government said they were going to do Agyapa, civil society said it wasn’t going to be possible and Agyapa was not done. GNPC said they were going to do Aker, but we said it wasn’t going to be possible to do it and they couldn’t do Aker. PDS, we said it wasn’t going to last, it did not last. We, in civil society, have a track record in analyzing government policies and telling government that if we do not do extensive and proper engagement this policy will not work and they don’t listen, they go ahead. This seems to be one of those policies,” he stated.

Dr. Bawumia, days ago, revealed that the government is negotiating a new policy that seeks to ensure the country purchases imported oil products with gold rather than foreign exchange.

In a Facebook post on November 24, 2022, the Vice President said the policy is expected to take effect by the end of the first quarter of 2023 and it forms part of efforts to address the persistent depreciation of the cedi.

He explained that once the policy is implemented, “it will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency with its associated increases in fuel, electricity, water, transport and food prices.”

Under the headline: “The Use of Gold To Buy Imported Oil Products,”the Vice President wrote:

“The demand for foreign exchange by oil importers in the face of dwindling foreign exchange reserves results in the depreciation of the cedi and increases in the cost of living with higher prices for fuel, transportation, utilities, etc.

“To address this challenge, Government is negotiating a new policy regime where our gold (rather than our US dollar reserves) will be used to buy oil products. The barter of sustainably mined gold for oil is one of the most important economic policy changes in Ghana since independence. If we implement it as envisioned, it will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency with its associated increases in fuel, electricity, water, transport and food prices.

“This is because the exchange rate (spot or forward) will no longer directly enter the formula for the determination of fuel or utility prices since all the domestic sellers of fuel will no longer need foreign exchange to import oil products.

“The barter of gold for oil represents a major structural change. My thanks to the Ministers for Lands and Natural Resources, Energy, and Finance, Precious Minerals Marketing Company, The Ghana Chamber of Mines and the Governor of the Bank of Ghana for their supportive work on this new policy. We expect this new framework to be fully operational by the end of the first quarter of 2023.God bless our homeland Ghana.”

But Mr.Poku, who is a member of the governing New Patriotic Party (NPP), and has declared his intention to contest the party’s presidential primary, said his discussions with others in the sector show government did not engage anyone.

“I don’t know who in the energy sector that Dr. Amin Antah [Deputy Minister of Energy] said they have engaged, but I can assure you that they have not engaged anyone within our space, within the civil society space.

“I speak to quite a number of them and none of them has been engaged. My little investigation I have done shows that it was an initial discussion at the NPA level and nobody knows why it ended up on the Facebook page of the Vice President,” he said.

Raising similar concerns is the executive director of the Alliance for Social Equity and Public Accountability (ASEPA), Mensah Thompson, who punched holes into the policy.

According to Mr. Thompson, the policy is not sustainable and may suffer challenges because the government took that decision alone without consultation.

Sharing his view on TV3’s New Day show yesterday November 30, Mr. Thompson asked government to stop the knee-jerk reactions and find better policy options to Ghana’s problems.

Similarly, an economics professor at the John Hopkins University, Steve Hanke, has described the plan to buy crude oil with gold by the government of Ghana as bogus.

He said the Vice President, who made this announcement, is grasping for straw, regarding this move.

In a tweet, Prof. Hanke said “VP of Ghana MahamuduBawumia unveiled a plan to buy oil with gold instead of the USD. Bawumia claims that his gold-for-oil plan will ‘reduce the persistent depreciation of our currency.’ Bawumia is grasping for straws. His plan is BOGUS.”

Interestingly, the Emirates National Oil Co. has also denied claims that it is engaging Ghana on the gold-for-oil barter deal announced recently.

According to Bloomberg, an ENOC person intimated that the assertion is “totally baseless and incorrect,” and that “there have been no discussions regarding this subject.”

An economic adviser to Vice President MahamuduBauwmia, Kabiru Mahama, had earlier on Friday said government reached a “tentative” agreement with the Dubai-based oil firm. But it is emerging that no such thing has happened.

Source: Anchorghana

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