Parliamentary Energy Committee to Review Dollar-Based Payments for Local Crude Refineries

The Parliamentary Select Committee on Energy is preparing to conduct a comprehensive review of the current policy requiring domestic oil refineries to purchase Ghanaian crude oil in US dollars. This move, led by Committee Chairman Emmanuel Kwasi Bedzrah, responds to growing concerns regarding the foreign exchange (forex) pressures placed on local refiners. Currently, these companies face a significant fiscal mismatch as they generate their revenue in Ghana Cedis from local sales but are forced to settle procurement costs in foreign currency. President John Mahama has already signaled his support for this shift, having directed a re-evaluation of the arrangement to alleviate the fiscal burden on the domestic energy sector and bolster national refining capacity.

When Parliament resumes its sessions in October, the committee will initiate a series of stakeholder consultations, including formal engagements with the National Petroleum Authority (NPA) and private sector players such as Sentuo Oil Refinery. Refinery executives have been vocal about the operational challenges posed by the dollar-payment mandate, arguing that it undermines their competitiveness and creates an artificial demand for dollars in the local market. By potentially aligning the currency of procurement with the currency of local sales, the committee aims to create a more sustainable and predictable operating environment for the industry.

The review process is timed to coincide with the consideration of two critical pieces of legislation: a new bill concerning the National Petroleum Authority and amendments to the Petroleum Revenue Management Act. Chairman Bedzrah emphasized that these legislative efforts are part of a broader national strategy to strengthen Ghana’s industrial base. The ultimate goal is to move the country toward greater self-sufficiency in petroleum products, thereby reducing the heavy reliance on costly imports and stabilizing the local economy through improved domestic industrial output.

Addressing these forex challenges is seen as a vital step in ensuring the long-term viability of Ghana’s energy infrastructure. As the committee moves forward with its review, the focus will remain on balancing the need for state revenue with the necessity of supporting local industrial growth. If successful, the transition away from dollar-denominated payments for local crude could serve as a crucial mechanism for reducing currency volatility while strengthening the entire value chain of Ghana’s natural resources.