The Chamber of Oil Marketing Companies (COMAC) has raised concerns over Ghana’s Gold-for-Oil (G4O) policy, questioning its effectiveness in addressing the country’s foreign exchange (FX) crisis and stabilizing fuel prices.
The policy, introduced in December 2022 and implemented in January 2023, was designed to leverage Ghana’s gold reserves to import petroleum products without depleting FX reserves.
However, two years into its implementation, COMAC in a recent report says data suggests that G4O has had a minimal impact on key economic indicators, and its continued execution raises concerns about transparency, financial viability, and the role of the Bulk Energy Storage and Transportation (BEST) formerly BOST Company in the fuel supply chain.
According to COMAC’s findings, the G4O program has only covered about 30% of Ghana’s fuel needs, limiting its ability to significantly influence market trends.
While government officials claim that the initiative helped reduce fuel premiums and inflation, COMAC’s analysis points to external market forces as the primary drivers behind the price reductions. The report notes that global oil prices had already begun declining after the initial surge caused by the Russia-Ukraine war, meaning that fuel prices would have dropped regardless of the G4O intervention. Furthermore, the exchange rate remains volatile, with the cedi continuing to depreciate despite the government’s use of 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. This indicates the exchange rate fluctuations driven by international market forces remains the dominant factor; a challenge that the G4O program failed to address.”, the report concludes.
Transparency remains a key issue surrounding the policy, as COMAC notes that there is little publicly available data on G4O transactions, financial risks, and procurement contracts. The lack of independent audits has fueled speculation that the program may have incurred significant financial losses.
Additionally, COMAC reveals 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 questions about the efficiency of government-led procurement under BEST. He alleges that fuel imported under the scheme was sometimes left unsold due to pricing mismatches, further straining government resources.
As concerns persist, COMAC is calling for a full reassessment of the policy’s viability suggesting that Ghana should consider shifting towards a Gold-for-Forex (G4F) model, where gold reserves are used to stabilize foreign exchange liquidity rather than directly trading them for petroleum.
This approach it says would provide a more sustainable method for ensuring FX availability for oil importers while maintaining market-driven pricing mechanisms.
COMAC further recommends structural reforms to address Ghana’s long-term fuel security challenges. These include revamping the Tema Oil Refinery (TOR) to reduce dependency on imported refined petroleum, improving fuel storage and distribution networks to minimize supply chain disruptions, and ensuring independent audits of government-led petroleum initiatives to enhance transparency and accountability. The report warns that if urgent action is not taken, Ghana risks repeating past mistakes where government intervention in the fuel sector led to inefficiencies, financial mismanagement, and supply shortages.
The Gold-for-Oil (G4O) policy was introduced in December 2022 as a strategic initiative to address Ghana’s foreign exchange (FX) liquidity challenges. The policy aimed to leverage the country’s gold reserves to procure refined petroleum products, thereby reducing reliance on the U.S. dollar for oil imports and stabilizing the Ghanaian cedi. Vice President Dr. Mahamudu Bawumia championed this approach, describing it as “the most important economic policy change in Ghana since independence.” He asserted that the G4O policy would stabilize the exchange rate and was expected to save the country approximately $4.8 billion annually. Dr. Bawumia also emphasized that without the policy, Ghana’s economy would have faced significant challenges, potentially leading to collapse.
However, as the policy progressed, concerns emerged regarding its implementation and effectiveness. Critics argued that insufficient planning and oversight during its formulation left gaps that could be exploited, leading to inefficiencies and potential financial losses. Additionally, the lack of publicly available data on G4O transactions and financial risks fueled speculation about the program’s transparency and overall impact.
As Ghana navigates its economic recovery, policymakers must decide whether to continue with the Gold-for-Oil model, refine it, or transition to a more effective strategy such as Gold-for-Forex.
Meanwhile, Energy Minister John Abdulai Jinapor recently expressed intentions to discontinue the Gold-for-Oil program over the lack of transparency and clarity of the program’s model
Attached is a copy of COMAC’s report on the G4O policy:
