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Gold for Oil: Fmr. Deputy Energy Minister extols Bawumia’s ‘smart move’

Source the Ghana Report

A former Deputy Minister of Energy, Joseph Cudjoe, has reiterated the need for Ghanaians to see government’s Gold for Oil policy as an innovative approach in dealing with the country’s over-reliance on forex, which hurts the economy.

Government’s G4O policy has received many reviews with opponents describing the policy as a bad one.

But now Minister for Public Enterprises Joseph Cudjoe rather describes the G4O Policy as a smart move which will “avoid increasing Ghana’s demand for dollars so that the price of dollars will not go up by heart”.

Below are his justifications:

A MATTER ARISING: THE GOLD FOR OIL WISDOM!

1. Oil importers in Ghana called BDCs (Bulk Distribution Companies) sell petrol and diesel in Cedis through fuel stations of the OMCs (Oil Marketing Companies). Yes. They sell in Cedis.
2. They want to import petrol and diesel again but they cannot use the Cedis to import.
3. Fact is that they can import with gold or they can import with dollars because some oil exporters out there accept gold. Unfortunately, they don’t accept Cedis.
4. If BDCs want to use dollars to import their oil, they have to buy dollars with the Cedis they have. If they want to use gold to import their oil, they have to buy gold with the Cedis they have.
5. The problem with BDCs trying to use dollars to import is that, their heavy demand for dollars always increases the price of the dollar. That is, they cause depreciation of the cedi against the dollar.
6. We all know this problem and yet we have lived with it for years.
7. Then comes the Smart move by the economics wizard – Bawumia. His question is simple. Why don’t you buy gold with the Cedis you have and use the gold to buy/import the oil? Why do you still want to buy dollars with your Cedis and use the dollars to import the oil?
8. Bawumia goes on to say you people know that when you use the Cedis to buy dollars, you increase demand for dollars and the price of dollars go up and you complain.
9. So simply use your Cedis to buy gold and use the gold to buy oil. In this case you avoid increasing Ghana’s demand for dollars so that the price of dollars will not go up by heart.

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