…Pushes for Cedi Payments for Crude Oil Purchases by Local Refineries
By Prince Ahenkorah
The Chamber of Petroleum Consumers (COPEC) is calling for local refineries to pay for crude oil purchases in Ghana cedis rather than US dollars, arguing that dollar-denominated transactions could increase pressure on the foreign exchange market and weaken the local currency.
The call comes amid efforts to supply domestic refineries with crude oil from upstream producer Tullow Oil to support local refining and reduce Ghana’s dependence on imported petroleum products.
Sentuo Oil Refinery received the first cargo under the arrangement earlier this year.
Executive Secretary of COPEC, Duncan Amoah, said settling crude oil purchases in cedis would align the refineries’ purchasing arrangements with the currency in which they sell their refined petroleum products on the domestic market
He maintained, however, that the commercial arrangements must protect the interests of upstream producers, the state and local refiners.
“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.
Amoah argued that requiring local refineries to pay in dollars when their products are sold in cedis could force them to compete with other businesses for limited foreign exchange.
“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 stated.
He added that the cedi remains Ghana’s legal tender for domestic commercial transactions and should be considered in structuring payments for crude supplied to local refineries.
Amoah also said the President had instructed the Ministers of Energy and Finance to ensure that refineries were offered flexible trading terms that would allow them to pay for crude oil in the local currency.
“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.
The proposal is intended to reduce the direct demand for dollars from local refineries and ease pressure on the foreign exchange market.
However, the practical impact of a cedi-based payment system would depend on the commercial terms agreed with crude suppliers and how the arrangement addresses the foreign exchange requirements of upstream producers and other parties involved.
The call forms part of broader efforts to strengthen Ghana’s domestic refining capacity, reduce reliance on imported petroleum products and limit the economy’s exposure to international oil price fluctuations and foreign exchange pressures.