President John Dramani Mahama has directed the Minister of Energy and Green Transition to review the current payment structure for Ghana’s locally produced Jubilee Medium Sweet Crude Oil, proposing that the Tema Oil Refinery (TOR) and Sentuo Oil Refinery pay in Ghana cedis instead of United States dollars.
The directive, disclosed by Energy Minister Dr. John Abdulai Jinapor, forms part of the government’s broader strategy to reduce pressure on the country’s foreign exchange reserves while strengthening the Ghana cedi through increased use of the local currency in domestic transactions.
The announcement was made during the commissioning of the refurbished facilities at the Tema Oil Refinery (TOR), where the government also celebrated the successful delivery and processing of one million barrels of Ghana’s indigenous Jubilee Medium Sweet Crude for domestic refining.
Mahama Questions Dollar-Based Payments
According to Dr. Jinapor, President Mahama questioned why refineries operating within Ghana must source foreign currency to purchase crude oil that is produced locally, refined domestically, and ultimately sold to consumers in Ghana cedis.
The Energy Minister explained that under the existing Petroleum Holding Fund arrangements and the Petroleum Revenue Management Act, locally produced crude oil supplied to TOR and Sentuo is paid for in US dollars, in line with international petroleum trading practices.
However, President Mahama believes the arrangement deserves reconsideration.
Speaking about discussions held with the President, the Energy Minister revealed that President Mahama instructed him to work with the Ministry of Finance and the Bank of Ghana to examine whether payments can instead be made in cedis into the Petroleum Holding Fund without undermining existing legal and financial frameworks.
Reducing Pressure on the Foreign Exchange Market
The proposal is expected to ease demand for foreign currency, which often contributes to pressure on the Ghana cedi.
According to Dr. Jinapor, the Governor of the Bank of Ghana supported the President’s thinking, noting that reducing the need for state-owned refineries to purchase large volumes of US dollars from the forex market could help stabilize the local currency while lowering transaction costs associated with foreign exchange conversions.
The government is expected to hold further consultations involving the Ministry of Finance, the Bank of Ghana, and the Energy Ministry to determine the legal and operational adjustments required to implement the proposal.
TOR Marks Major Milestone
The announcement coincided with a major milestone for the Tema Oil Refinery, which officially commissioned its refurbished Crude Distillation Unit (CDU), Residue Fluid Catalytic Cracking Unit (RFCC), new crude heater, steam boiler, and other upgraded infrastructure.
President Mahama disclosed that TOR has received three separate one-million-barrel crude oil cargoes since May, including Bonga crude, Baleine crude, and Ghana’s Jubilee Medium Sweet Crude. Two million barrels have already been refined into petroleum products, while payment for the Jubilee crude shipment has been completed.
The President further directed the Ministry of Energy and the TOR Board to develop a strategic plan to increase the refinery’s processing capacity to 100,000 barrels per day, positioning the refinery as a stronger contributor to Ghana’s energy security and industrial development.
Boosting Energy Independence
The government’s latest proposal forms part of broader efforts to strengthen Ghana’s energy sector, improve local refining capacity, reduce dependence on imported petroleum products, and enhance the country’s economic resilience.
If successfully implemented, paying for locally produced crude oil in Ghana cedis could represent a significant policy shift in Ghana’s petroleum industry, potentially reducing foreign exchange demand while promoting greater use of the local currency in strategic sectors of the economy.
Government officials are expected to announce the outcome of the upcoming stakeholder consultations in the coming weeks as discussions continue on the feasibility of the proposal.
