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

Ghana’s Parliamentary Select Committee on Energy is set to undertake a critical review of the existing policy that mandates domestic oil refineries to purchase locally produced crude oil in United States dollars. This move, led by Committee Chairman Emmanuel Kwasi Bedzrah, aims to address the significant foreign exchange pressures currently facing the domestic refining industry. President John Mahama has also voiced strong support for the review, directing that the payment arrangement be reconsidered to bolster domestic refining capacity and alleviate the persistent demand for foreign currency in the energy sector.

The decision to re-evaluate the dollar-payment requirement stems from a misalignment in the current market structure, where local refineries must acquire their primary raw material in dollars while selling finished petroleum products in Ghanaian cedis. This disparity exposes domestic refiners to volatile exchange rate risks and complicates their operational efficiency. Key industry players, including executives from the Sentuo Oil Refinery, have advocated for these changes, arguing that a shift in the payment regime is essential to improve the operating environment and enhance the competitiveness of local players against international importers.

Formal consultations and stakeholder engagements are scheduled to begin when Parliament resumes its session in October. The Select Committee plans to meet with the National Petroleum Authority (NPA) and other vital stakeholders to determine the most appropriate payment framework. These discussions will be integrated into the consideration of two upcoming pieces of legislation: a bill to amend the National Petroleum Authority Act and a new Petroleum Revenue Management bill. Chairman Bedzrah emphasized that these legislative efforts are part of a broader strategy to strengthen Ghana's industrial infrastructure and reduce the nation’s heavy reliance on imported refined products.

Beyond providing immediate relief for refineries, the proposed policy shift is viewed as a strategic measure to stabilize the national currency by reducing domestic demand for the US dollar. By fostering a more sustainable and predictable ecosystem for local oil processors, the government aims to enhance national energy security and ensure that Ghana’s crude oil resources provide maximum benefit to the local economy. The outcome of these parliamentary deliberations is expected to set a new precedent for resource management and industrial support under the Mahama administration.