President John Mahama has directed the government to review the payment arrangements for Ghanaian crude oil supplied to the Tema Oil Refinery (TOR), with a view to settling payments in Ghana cedis rather than U.S. dollars. The directive, announced by Energy Minister Dr John Jinapor, aims to reduce pressure on Ghana's foreign exchange market.
Review of TOR's Crude Oil Deals to Begin This Week
The review of TOR's crude oil deals follows President Mahama's question about the rationale behind the current arrangement, which requires the state-owned refinery to purchase U.S. dollars to pay for crude oil produced in Ghana. According to Dr Jinapor, the President immediately directed that the arrangement be reconsidered, arguing that it was inconsistent with the refinery's operations, since refined petroleum products are sold in the local currency.
The Finance Minister and the Governor of the Bank of Ghana were present when President Mahama gave the directive, and the Governor agreed with the President's assessment, noting that the current arrangement places unnecessary pressure on Ghana's foreign exchange market. The review of TOR's crude oil deals forms part of the government's broader Reset Agenda, which seeks to deepen local value addition, strengthen domestic industry, and reduce Ghana's dependence on foreign currency in key sectors of the economy.
Ghana's Dependence on Foreign Currency in Focus
Ghana's dependence on foreign currency in key sectors of the economy has been a major concern for the government, with the country's foreign exchange market facing significant pressure in recent times. The government's Reset Agenda aims to address this issue by promoting local value addition and strengthening domestic industry. The review of TOR's crude oil deals is a key part of this agenda, and it is expected to have significant implications for the country's economy.
What's Next for TOR's Crude Oil Deals
The review of TOR's crude oil deals is set to begin this week, with a meeting scheduled to take place next week to restructure the payment framework. If adopted, the proposal would allow TOR to pay for Ghanaian crude oil in cedis rather than U.S. dollars, reducing the refinery's demand for foreign exchange while potentially lowering transaction costs and supporting the stability of the local currency. The outcome of the review is expected to have significant implications for the country's economy, and it is closely watched by stakeholders in the energy sector.
Source: Joy Online
