The managing Director of Bulk Oil Storage and Transportation (BOST), Edwin Alfred Provencal, has noted the outmost benefit of the Gold for Oil Deal by the government is to reduce the price of fuel to a single digit.
Explaining the rationale behind the deal on Movement in the morning show on Movement TV/ Wontumi Radio, he noted the deal is geared towards reducing the pressure on the dollar, which will in turn reduce the prices of oil and will subsequently impact the prices of goods.
He noted that when COVID-19 was declared a pandemic, the whole economy worldwide came to standstill. Hence even China, which is the manufacturing hub for the world was shut down as lives were lost, economies were shutting down among other- adding that here in Ghana, as part of measures to curtailing the spread of the virus and save lives, many measures were implemented, including the free electricity, Water, PPEs among others- government was putting money into pockets of Ghanaians.
However, when economies began bouncing back, China relaxed its restriction and therefore many Ghanaians began trooping into the country to import goods and the demand for dollar began to skyrocket. Ghanaians were rushing to the Bank of Ghana for dollar and because the BoG also didn’t have enough dollars, the rate automatically shot up and when that happens, prices of goods also increased.
“The problem we identified was inflation- and we noticed it’s a forex induced inflation and therefore we had to reduce the demand for dollar in the local economy. Especially the dollar to buy oil- because it touches every facet of life in this economy”, he said.
Adding that “Government was buying crude oil for $4.8Billion. As a government, in order not to make matter worse by demanding for such an amount to buy oil as the pressure on the dollar was already high, we decided to search for a different payment mechanism when used, we wouldn’t have to search for dollar”.
He stressed that this would reduce pressure on the dollar which will subsequently reduce the price of dollar because the pressure will be less. Once this happens, it will affect the prices of oil, which will also reduce the prices of goods including, Kenkey, Salt, Tomatoes, Brazilian hair and even condom.
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