Energy Minister Signals Plans to Scrap Controversial Gold-for-Oil Initiative

The fate of the much talked about Gold for Oil Initiative by the previous administration hangs in the balance as Minister for Energy, John Abdulai Jinapor has disclosed the government‘s intention to scrap the programme.

John Jinapor says the new government has uncovered serious systemic challenges of the programme which makes it imperative for its discontinuance.

According to the minister, a major issue for his government concerns the opacity and transparency problems they have identified with the initiative. The minister says the initiative is shrouded in too much secrecy which even makes obtaining adequate information a herculean task.

The criteria for selecting companies involved in the programme appears very opaque necessitating the need for drastic measures.

John Jinapor says although the decision has been made to discontinue the initiative, there won’t be immediate action. Rather, the programme he says will be managed as the government finds a better alternative. 

“The current Gold for Oil programme we’ve inherited, we will discontinue it. Take it from me,” the Energy Minister said in an interview monitored by The High Street Journal.

But in the interim, he says the government is “trying to shape the current system and ensure that we reduce the losses and make it a bit more transparent. But ultimately, we want to replace this Gold for Oil programme and put in place a much more effective system.”

The Gold for Oil Programme was borne out of the Bank of Ghana’s Domestic Gold Purchasing Programme (DGPP). Introduced in 2021, the DGPP among other objectives is engineered to enable the Central Bank to buy gold from local producers with the local currency.

The programme was designed to curb smuggling, build gold reserves, and ensure the stability of the local currency by minimizing the high demand for dollars to buy gold.

The G4O, an offshoot of the DGPP seeks to use locally mine gold purchased by the Central Bank to purchase oil instead of relying on the US dollars. With this initiative, either the government directly swaps the gold for oil or sells the gold for dollars and uses the forex to purchase oil.

One critical aim of the G4O initiative was to ensure the stability of fuel prices at the pumps. Unfortunately, this objective has eluded the government as fuel prices continue to soar questioning the effectiveness of the programme.

The Energy Minister is not the first to raise concerns about transparency and accountability issues regarding the initiative. One vociferous person is the Vice President of IMANI Africa, Bright Simons whose analysis of the programme has revealed serious efficiency issues.

Other stakeholders on various platforms have criticized certain aspects of the initiative.

John Jinapor’s remark is a clear indication that in the coming months, the government will gradually phase out the Gold for Oil initiative while exploring alternative policies that better align with Ghana’s economic and energy needs.

However, with lingering questions about the fate of the existing agreements under the G4O scheme and the timeline for a transition, industry players and consumers will be watching closely to see what comes next.

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