The Executive Director of the African Centre for Energy Policy (ACEP) has raised concerns the much-touted Gold for Oil programme will collapse the downstream petroleum sector.
According to him, in the attempt to clothe the Gold for Oil programme with some credibility, the government is suffocating profit-making ventures and undermining the private sector.
He questioned whether the entities that are being dressed up to monopolize the petroleum sector using the Gold for Oil policy would be able to sustain it, given their history of inefficiency.
ACEP’s Ben Boakye raised the alarm in an interview after an engagement with members of the Parliamentary Press Corps (PPC) on Monday 5th June 2023.
The event discussed the drivers of Ghana’s fiscal challenges and the proposed remedies for long-term economic sustainability.
He stated the entire programme is still shrouded in secrecy and explained as a policy think-tank, ACEP does still know exactly what is happening in the oil space.
He said, “As far as we are concerned, we only know that the gold that has been purchased so far is not enough to account for the volumes of oil that have been imported.”
“So what it essentially means is that there is some dollars or some currency that are being used to procure oil for the Ghanaian market.”
Ben Boakye stated that Gold for Oil has distorted the gold market very badly leading to smuggling.
Tax revenue
According to him, the worse of it is the huge tax revenue that the government is losing from the gold side of the policy.
He explained that in the past, the government took 1.5% from gold transactions, the Precious Mineral Marketing Company (PMMC) charged 0.24 while the Minerals Commission charged 0.2.
This, he said, meant approximately 2.5% of the value of every gold exported went to the state in the form of tax revenue but the policy has scrapped it.
Quantify the losses
Ben Boakye explained the need to quantify how much losses the state has made on the back of the Gold for Oil transactions.
“We really need to, as a country, quantify the losses of that application on the back of the gold oil programme for taxes the state is not getting for gold that has been smuggled over the period and losses resulting from Bank of Ghana interventions.”
He revealed that the Bank of Ghana at one point was buying gold on the domestic market at world market prices which led to losses.
“So how much loss did Band of Ghana take for buying the raw gold at world market prices in Ghana and transporting it to Dubai to refine.”
“We need to account for all these losses to be able to inform the public how damaging the policy has been to the country”, he said.