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Miners unhappy with gold for oil barter policy

  • SOURCE: | qwesa2big
    • POSTED ON: December 12, 2022

    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.


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