Egyapa Mercer: A 10% increase in gold in oil will not have an immediate impact on market dynamics.



 The government has stated that the gold for oil strategy would not result in immediate gasoline price reductions until further consignments arrive in Ghana.

Deputy Energy Minister Andrew Egyapa Mercer stated that the government does not anticipate gasoline costs to alter soon with only 10% of the entire transaction.

On January 15, the first 40,000 metric tons of oil landed in Ghana.

The delivery of the 40,000 metric tons was expected to relieve FX pressures and provide the country with cheaper gasoline, but this has not been the case, as fuel prices have jumped twice during the period, displeasing the majority of Ghanaians.


Mr Egyapa Mercer stated on Thursday that the initial consignment was only part of the trial phase.

"It wasn't our hope that it [gold for oil policy] will have an overnight effect since there are stockpiles that are already on the market, so you cannot assume that an infusion of 10 percent of the gold for oil policy will suddenly affect the pricing dynamics. It is a method, not an event."

Mr Egyapa Mercer already stated that the initial shipment of 40,000 metric tons of oil imported into the nation under the Gold-for-oil scheme was paid for with cash rather than gold.

He said that the money came from the sale of gold overseas, and the proceeds were utilized to purchase fuel.


His announcement comes after industry experts such as the Institute of Energy Securities and COPEC urged the government to reveal the amount of gold it swapped for the 40,000 metric tons of gasoline, raising concerns about the deal's feasibility.

The Minority in Parliament also questioned the policy's viability, claiming that it would have little effect on current gas prices.

Mr. Mercer stated that the firms they first interacted with did not have the ability to convert gold for oil.


"The program initially originated with an aim to undertake rigorous barter for gold and petroleum products, but it became evident that any of the international oil trading corporations who do not have a commodity wing to deal with gold on their behalf will be barred from the policy.

"We developed the policy in such a way that we were operating two streams, one was direct barter and the second was gold monetisation, so we could pay for IOTs that were not other commodity focused but solely petroleum products...so the test run that we did was actually paid through the second route."


ABDUL-WAHAB

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