While government is yet to officially write to the Chamber
of Mines on the proposed gold for oil barter policy, the Chamber is wary of how
having too much cedis could affect its members.
The government wants large-scale miners to sell, at least,
20 percent of their gold in local currency to Bank of Ghana toward a gold for
oil barter policy. But the Chamber says the policy, combined with an already
existing revenue repatriation programme, would now mean miners are retaining as
much as 50 percent of revenue in cedis, a situation it cautioned could have
very dire consequences for miners given the wobbly nature of the domestic
“If you combine the existing repatriation arrangement with
the 20 percent, effectively mining companies are expected to convert 50 percent
of their revenue into Ghana cedis and that maybe too much for the mining
industry. We will continue to discuss but we want to pitch at a point where we
will be able to help the country and, at the same time, we are not going to
make the industry worse off.
“We may be sitting with so much cedis, and once we sit with
so much cedis – a volatile currency which is wobbly – then, it actually affects
you as well. So we need to calibrate it and put it at a point both parties will
be happy,” says the Chamber’s Chief Executive Officer, Sulemana Koney.
Mr. Koney spoke to the B&FT on the sidelines of the 2022
Ghana Mining Industry Awards in Accra, and said much proper engagements are
needed to strike a fine balance between what the industry can do to help the
government and maintain a vibrant industry.
Asked if the Chamber, which is the umbrella body of all
large miners, has been officially informed about the proposed oil for barter
policy, he said: “As far as we are concerned, we have had conversations but
essentially on the back of mutually agreed points or positions. So it is
something we need to have proper conversations with the government on, but we
have not had a formal communication from the Minerals Commission or sector
ministry or possibly the Bank of Ghana.
“We have had conversations, no two ways about it, with the
Governor of the central bank, the Vice President and Members of Cabinet that
our expectations or outstanding was that it was going to be a short-term
programme. We had targets for 2022 and 2023; that is what we had and we have
had the occasion to find out from our member-companies how much of the target
presented to us by the BoG and we have gone back to BoG to say this is what our
members can do.
“So, yes we have not had a formal communication, but…we need
to sit and discuss how we can work together to make sure we balance the
industry because it is important that we continue to have viable mining
industry,” he further added.
He also clarified that the underpinnings of the gold for oil
exchange policy and the ongoing gold purchase programme by Bank of Ghana were
different, as the former seeks to accumulate domestic mined gold in exchange
for finished petroleum products, which the economy spends about US$380million
importing every month.
This year alone, the cedi has lost over 53 percent of its
value; and the gold for oil exchange policy, which Vice President Dr. Mahamudu
Bawumia says would save the economy US$3billion in foreign reserves, when
implemented, is one of a number of desperate measures to arrest the persistent
depreciation of the domestic currency.
Meanwhile, questions have been asked about the viability of
the policy, particularly how the government intends to raise as much as
US$380million monthly to buy gold in exchange for petroleum products.
For instance, the policy has been described as premature and
one with the potential to breed corruption by two leading energy sector civil
society organisations – Africa Centre for Energy Policy (ACEP) and Institute
for Energy Security (IES).
“We can always stress-test policy before announcements. Gold
for oil is weird,” says Benjamin Boakye, ACEP’s Executive Director. “The common
denominator is the dollar. Total gold export was US$4.8billion last year, just
about how much we needed to import refined products.”
“Our monthly import bill for finished petroleum products is
roug hly US$380million. Can government get gold to the tune of US$380million
every month for exchange of finished products?” Nana Amoasi VII, Executive
Director of IES, asked.
He warned that barter is not a transparent arrangement, and
could breed corruption.
He said similar arrangements – including Iran’s ‘oil for
food programme’ in the 1990s, Nigeria’s recent ‘crude oil for finished
products’ programme – all became avenues for corruption.
Tagged Chamber of mines