The Chamber of Petroleum Consumers (COPEC) is pressing for local refineries to pay for crude oil purchases in cedis rather than dollars, arguing that dollar-denominated payments could increase pressure on Ghana’s foreign exchange market and weaken the cedi.
This comes as upstream oil producer, Tullow Oil, supply crude oil to local refineries to support domestic refining and reduce Ghana’s reliance on imported petroleum products. Sentuo Oil Refinery received the first cargo under the arrangement earlier this year.
Executive Secretary of COPEC, Duncan Amoah, says allowing refineries to pay in the local currency would align their crude purchases with the currency in which they sell refined petroleum products on the domestic market.
He maintains that the commercial arrangements must protect the interests of upstream producers, the state and local refiners while reducing pressure on foreign exchange demand.
“That the crude is being sold on a commercial arrangement basis is a good thing so that the Jubilee Partners do not lose, Tullow does not lose, the state Ghana does not also lose the expected revenue,” he said.
Duncan Amoah, however, argues that crude oil purchases for domestic refining should be settled in cedis, noting that the local currency remains Ghana’s legal tender for commercial transactions.
“I am happy that Mr. President has already instructed the Energy Minister, the Finance Minister to ensure that these refineries are given a flexible trade term such that they can pay for the crude in the local currency,” he added.
According to him, requiring refineries to pay in dollars when their products are sold locally in cedis could force them to compete for scarce foreign exchange needed by other businesses to finance imports.
“Don’t forget, whatever they refine and sell, they sell to the Ghanaian market in cedi. And so if you ask them to pay dollar, you are simply asking them to come back to the same market that doesn’t have enough dollars for the other importation space to crowd them out and further put pressure on the Cedi causing depreciation,” he argued.
The call comes amid efforts to strengthen domestic refining capacity and reduce dependence on imported petroleum products, which expose Ghana to international price movements and foreign exchange pressures.
A cedi-based payment arrangement, if implemented, could reduce local refineries’ direct demand for dollars.
However, its effectiveness would depend on the commercial terms agreed with crude suppliers and how the arrangements address the foreign exchange needs of upstream producers and other parties involved in the transactions.
