Vice-President, Mahamudu Bawumia has said that he had restless nights when the country’s bulk oil distribution businesses priced petrol at GHC19 to a dollar .
According to Bawumia, the nightmare sparked the idea for the gold for oil initiative.
The policy is designed to allow the government to pay for imported petroleum products with gold in direct barter arrangements, using gold purchased by the Bank of Ghana.
The policy aims to help stabilise prices of fuel products, as well as reduce pressure on Ghana’s foreign exchange, because direct gold barters will be the modus for paying for imported oil, which will help guard against depleting the country’s foreign exchange reserves.
“One moment which gave me a lot of sleepless nights personally was when at one point, the forward exchange rate of GHC19 to the dollar was used to price fuel at the pump,” Bawumia said at the commissioning of the head office of the Bulk Oil Storage Transportation Company in Accra on Wednesday (15 March).
“And therefore, we were faced with how much higher it could go. We were faced with a very critical situation because we didn’t have enough foreign exchange reserves to meet this persistent demand.
“Today, you are seeing that in Kenya, they are facing significant shortage of foreign exchange reserves resulting in petroleum queues.
“So, we had to think outside the box to prevent Ghana from going through that situation… and this is where the thinking for gold for oil came in,” Bawumia said.