Parliamentary Energy Committee to Review Dollar Payment Policy for Local Oil Refineries

Ghana’s Parliamentary Select Committee on Energy is set to conduct a formal review of the policy requiring local oil refineries to settle crude oil purchases in US dollars. Chaired by Emmanuel Kwasi Bedzrah, the committee plans to investigate how this arrangement contributes to foreign exchange pressures and affects the operational stability of the domestic energy sector. The move follows growing calls from industry players to align payment systems with the local economic environment, particularly as refineries struggle with the volatility of the currency market.

The core of the issue lies in a significant currency mismatch: while local refineries are mandated to pay for raw crude in US dollars, they primarily sell their finished petroleum products in Ghanaian cedis. This requirement has been identified as a major driver of demand for foreign exchange, often putting additional strain on the national reserves. Executives from the Sentuo Oil Refinery and other key stakeholders have been vocal advocates for reform, arguing that the current system creates an uneven playing field and hampers the growth of domestic refining capacity.

When Parliament reconvenes in October, the committee will initiate broad consultations with stakeholders to evaluate the appropriateness of these dollar-denominated transactions. These discussions are expected to inform the development of two upcoming energy bills aimed at restructuring the sector. President John Mahama has previously expressed support for reconsidering the dollar payment mandate, viewing such a change as a strategic necessity to bolster the nation’s industrial base and ensure that local refineries can operate efficiently without being hindered by prohibitive exchange rate costs.

The outcome of this parliamentary review could mark a significant shift in Ghana's downstream petroleum policy. By potentially transitioning to cedi-based payments or other alternative mechanisms, the government aims to reduce the economy's heavy reliance on the dollar for internal trade. Success in this area would not only support the financial health of refineries but also contribute to the broader goal of energy security and macroeconomic stability under the current administration.