Gold for oil (G4O)
Oil for gold deal

Gold for oil (G4O)

Vice-President Dr Mahamudu Bawumia announced sometime ago that government was going to go into a ‘Gold For Oil’ arrangement to rationalise our import of petroleum products, including its foreign exchange ramifications.

I am fully aware what petroleum prices do and can do to an economy that spends US$400 million per month (US$4.8 billion annually) importing the products.


So, I paid attention.

Recently, it was announced that an initial 41,000 metric tonnes had arrived in the country under the programme.

This is just about 10 per cent of the total domestic petroleum requirement monthly.

As a test cargo, it was to enable the relevant authorities test all the systems put in place to implement the programme.

The other day, I went on a hunting expedition to figure all this out and I am happy to share the education I received with you.


The Gold for Oil (G4O) Programme is an initiative of the Government of Ghana (GoG) to use the existing Bank of Ghana (BoG) Domestic Gold Purchase (DGP) Programme to support the import of petroleum products into Ghana.

The prime objective of the programme is to use additional foreign exchange resources from the BoG’s DGP programme to provide foreign currency for the importation of petroleum products for the country, which currently stands at about USD350 million per month.

The government has begun the implementation of the G4O Programme, where gold purchases under the BoG’s DGP Programme, mainly through the Precious Minerals and Marketing Company (PMMC), and where required from aggregators and mining firms, is used to purchase petroleum products.

This is intended to free up foreign exchange resources to meet petroleum imports of the country, thereby reducing pressures on the BOG’s foreign reserves and the banking sector emanating from the Bulk Import, Distribution and Export Companies’ (BIDECs’) request for foreign exchange.

The programme also aims to procure petroleum products at very competitive prices through Government-to-Government (G2G) arrangements.

The programme will ensure that the cost of importing the products from international oil traders will always be comparatively lower.

The consequent reduction in foreign exchange pressures, the reduction in premiums charged by international oil traders, as well as efficiency gains from the value chain will translate to lower ex-pump prices in the country.

Process flow, requirements

Under the programme, all the dore gold produced and exported by companies with licensed small-scale concessions, including community mines through the PMMC, shall be purchased by the BoG.

The Ministry of Lands and Natural Resources (MLNR) has issued directives towards the realisation of the programme.

The purchased dore gold is used for the payment of oil supply to Ghana.

Payment for oil supply is to be done in two channels: by way of barter trade or via broker channel.

Under the barter channel, for suppliers willing to take gold in direct exchange for petroleum products, BoG will provide equivalent volume of gold.

Both the BoG and the International Oil Trading Companies (IOTCs) are required to open Gold Metal Accounts in a mutually agreed gold refinery for the purpose of gold transfer.

BoG accumulates refined gold in its metal account at a refinery nominated by a supplier to fund petroleum product shipments.

BoG transfers equivalent amount of gold based on petroleum products supply invoice from its metal account to a supplier’s metal account on receipt of Quality Certificate (QC) of the product supplied and final invoice from Bulk Oil Storage and Transport Company (BOST).


Under the broker channel, the BoG executes a Gold Supply Agreement under which it sells gold to a gold broker, which provides forex cover to pay for petroleum products.

This is because not all suppliers of petroleum products may necessarily be interested in gold.

The gold broker buys dore gold from BoG and deposits the proceeds in a BoG gold holding account.

The BoG transfers funds from gold holding account to an Escrow Account to pay for petroleum product shipment on receipt of QC and final invoice from BOST.


BOST, a state company, operates as an off-taker for petroleum products, and, therefore, executes an agreement with IOTCs for the import of petroleum products to Ghana for onward sale to licensed Bulk Import, Distribution and Export Companies (BIDECs).

The BIDECs buy directly from BOST with cash and or a letter of credit (guarantee) from a reputable financial institution.

BOST and the National Petroleum Authority (NPA) ensure that the cedi proceeds from the sale of imported petroleum products will be collected and deposited with a collection bank in favour of BoG.

The collection bank is required to transfer collected funds into BoG’s G4O proceeds account within 48-hours, which is then used to fund the next cycle of gold purchases.


Availability of gold for programme

A legitimate question that has been asked is whether the BoG has the capacity to increase its gold reserve, as well as purchase sufficient gold to support petroleum product imports.

Under its Domestic Gold Purchase Programme, the BoG, over the last two months, commencing on November 28, 2022, has sold 50,945 ounces of gold, with a total monetary value of US$96.6 million.

Of this amount, US$40.6 million from the gold proceeds was used to procure the petroleum products of 41,991 metric tonnes that recently arrived under the programme.

Another 20,000 ounces of gold are in transit, with a value of US$38.4 million. The expected cumulative amount of US$94.3 million will be available to support the next cargoes of petroleum products.

BoG will continue to increase gold purchases, eventually reaching 160,000 ounces monthly to provide forex cover for 50 per cent of the total domestic petroleum supply.

Petroleum pricing

To ensure that the price of petroleum products imported under the G4O programme reflects at the pumps to benefit the consumer, the National Petroleum Authority (NPA) will regulate the prices of these products in the interim to correct market failure until the policy matures.

NPA will work with BOST to negotiate prices with the international oil traders to ensure that the landed cost of products procured under the programme are always competitive.

NPA will approve the IOTC that will be selected to supply products to BOST under the programme based on the competitiveness of the offers made by them. BOST will sign supply contracts only after approval has been granted by the NPA.

The price at which BOST will sell the products to BIDECs will be approved by the NPA.

The price at which the BIDECs will sell the products to Oil Marketing Companies (OMCs) will also be approved by the NPA.

The OMCs that bought the initial Gold for Oil products were expected to blend with relatively more expensive petroleum products they bought from other sources to meet their demand.

As expected, the blended products were priced through weighted average pricing method.

Given the lower volumes of the test cargo, the blended prices at the pumps of those OMCs saw minimal reductions.

Government expects to increase the volumes over the next few months to about 50 per cent of the total market requirement, which currently stands at 350,000 metric tons (diesel and petrol).

This should see, ultimately, a drop in the ex-pump price, to our collective relief.

As a system, I am sure there will have to be some tweaks along the way and legitimate questions and concerns to address.

But it is better to take a faltering step than to take no step at all.

At the end of it all, what matters, without doubt, is the fact that some people have been thinking innovatively.

That is leadership.

Rodney Nkrumah-Boateng,
E-mail: [email protected]

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