The originators of the Gold-for-Oil (G4O) sold it as a bold, almost revolutionary antidote to stabilise the cedi, lower fuel prices, and guarantee a steady supply at the pumps, but new data published by Bright Simons revealed that these objectives were never achieved.
The Honorary Vice President of IMANI Africa says, perhaps the major impact of the initiative was the over 500% increase in the market share of the state-owned Bulk Oil Storage and Transportation Company (BOST).
Six months after the programme was halted by the current administration, one of Ghana’s leading policy analysts says the grand experiment achieved nothing, except to hand BOST a swollen market share.
In his latest commentary on the saga, he insists that the analysis available to him reveals that no currency stability and cheaper fuel were achieved.
The irony, he notes, is impossible to miss. Even at the peak of G4O, private Bulk Distribution Companies (BDCs) still supplied more than 70% of Ghana’s fuel needs. Consumers, meanwhile, saw no respite at the pumps. Prices did not come down. The cedi did not hold firm. Life at the filling stations went on as usual.
“In the 6 months since termination, and reversion to standard dollar auctions, life goes on as normal. No shortage at the pumps, no crazy hikes in the dollar. Attached are graphs that show that G4O’s only impact was to increase BOST’s market share by over 500% (even so, private BDCs still supplied >70% of fuel at the peak of G4O). No other benefit is visible. Currency stability? Zilch. Pump prices? Nada.,” he remarked.
Aside from the failure to cause any significant changes at the pumps, it also came along with a huge cost to the Bank of Ghana. The Central Bank admits to foreign exchange losses of more than GH₵2.1 billion.
Added to that were fees for mysterious middlemen and premiums for obscure traders; some, he says, had no prior record in the fuel industry. One such company is now facing criminal proceedings in London over its G4O dealings.
Perhaps most damning is IMANI’s counterfactual analysis. By comparing fuel price data before, during, and after the programme, the think tank concludes that without G4O, consumers might actually have paid slightly less.
“In fact, eliminating the forex losses and brokerage fees, and margins could well have benefited consumers. So, we ran a counterfactual analysis, which showed just that: without G4O, prices would have been marginally lower,” he revealed.
In effect, the analysis by Bright Simons reveals that the policy that promised “heaven and earth” gave very little close to what it promised aside from inflating the market share of BOST.
