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Gov't in talks with Dubai oil refiner to barter gold for fuel

The government of Ghana is in talks with a Dubai-based oil firm for a barter arrangement that will enable the country to buy fuel with gold.

Dr. Mahamudu Bawumia

This comes after the government reached a 'tentative' agreement with the oil firm called Emirates National Oil Company.

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Kabiru Mahama, an economic adviser to Vice President Dr. Mahamudu Bawumia in a phone interview on Friday, Bloomberg reported disclosed that "We're open to any international oil-trading company that is interested.

"Starting next October, all our oil-product needs would be swapped for gold."

Meanwhile, Dr. Mahamudu Bawumia has said the government is projecting to save about US$3 billion in foreign exchange yearly from the proposed policy which seeks to acquire oil products in exchange for gold.

He explained that the policy which would be implemented in the first quarter of next year could also relieve some inflationary pressure on the cedi.

Speaking at the 11th Association of Ghana Industries (AGI) Ghana Industry and Quality Awards in Accra, Bawumia said "So we will be saving US$3 billion from the lack of demand from the Bank of Ghana (BoG) for foreign exchange. This reduces the pressure on the cedi immediately and, therefore, you will see much, much lower depreciation of the currency."

He indicated that the import-reliant nature of the economy, particularly for finished petroleum products, accelerated the depreciation of the cedi and increased the cost of doing business and cost of living.

"What drives fuel prices and also increases the cost of doing business is fundamentally the exchange rate. So if you are able to have a handle on the exchange rate, you are able to lower the depreciation of the cedi," he noted.

He hinted that the barter of sustainably mined gold for oil is key in addressing the economic crisis confronting the country.

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