Parliament to review dollar payment for locally produced crude

The Parliamentary Select Committee on Energy is set to review the requirement for local oil refineries to pay for Ghana’s crude oil in US dollars, following concerns that the arrangement is increasing foreign exchange pressures on domestic refiners.

The committee plans to engage the National Petroleum Authority (NPA) and other relevant stakeholders when Parliament resumes in October to assess whether the current payment system is appropriate for a domestic refining industry that largely sells its petroleum products in Ghana cedis.

The committee’s Chairman, Emmanuel Kwasi Bedzrah, disclosed this on Tuesday during an inspection of the Sentuo Oil Refinery in Tema as part of Parliament’s oversight activities.

“I can tell you on authority that when we return to Parliament in October, there are two bills that will be coming before us — the National Petroleum Authority Bill and the Petroleum Revenue Management Bill.

“We will be looking at them, particularly this issue of how a local product that is sold on the local market is treated.

"So, don't worry. I can assure you that when we resume in October, we will look at the matter and consider what needs to be done,” he said.

The planned review comes amid a broader discussion about how Ghana can maximise the value of its crude resources while strengthening the domestic refining industry.

Management of Sentuo Oil Refinery has previously raised concerns about the foreign exchange implications of purchasing locally produced crude in US dollars, particularly because the refinery processes the crude domestically and sells much of its finished products in cedis.

Committee to assess policy
Mr Bedzrah said the committee would consider the NPA’s position alongside concerns raised by refinery operators before deciding on any possible parliamentary action.

The issue has also attracted attention from the Presidency. In August, President John Dramani Mahama directed the Minister of Energy and Green Transition, Dr John Abdulai Jinapor, to review the existing arrangement and explore whether Tema Oil Refinery (TOR) and Sentuo could be allowed to pay for locally produced crude in Ghana cedis.

Mr Bedzrah stressed the importance of strengthening Ghana’s refining capacity as part of efforts to reduce dependence on imported petroleum products and retain greater economic value from the country’s crude oil resources.

Call for closer collaboration
The Ranking Member of the committee, George Kwame Aboagye, called for closer cooperation between the government and domestic refineries to address policy and operational challenges affecting the sector.

He said policies governing the industry should promote efficient refinery operations and competitiveness while avoiding additional costs that could eventually be passed on to consumers.

The Executive Chairman and President of Sentuo Group, Xu Ningquan, also appealed to the committee to support a review of the dollar-payment arrangement, arguing that doing so could ease foreign exchange pressures and create a more supportive operating environment for local refineries.

The International Business and Coordination Director of Sentuo Group, Samson Deen, similarly called for stronger government-industry collaboration to address foreign exchange and crude supply challenges and enable local refineries to operate more competitively.