How Ghana insured her people against oil price shock

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Ghana president John Atta-Mills

Posted  Saturday, May 7 2011 at 19:24

Ghana is benefiting from petroleum price hedging it entered into in 2010 before the current increases in world prices of the commodity.

The government decided to hedge the oil price at $82 a barrel in 2010 when the world price was around $80.5.

“We hedged the price at 82 dollars for six months, but we have had to move it up to 92.5 dollars for May and June deliveries, and now to 100 dollars for July 2011 delivery. So with the current price of 120 dollars, we are insured,” said Finance and Economic Planning Minister, Kwabena Dufuor. 

Mr Duffuor was speaking at a gathering to issue the Regional Economic Outlook report on Sub-Sahara Africa prepared by the International Monetary Fund (IMF).

Last October, Ghana entered into a hedging agreement with the Standard Chartered Bank, Citi Group and the Ghana International Bank for 50 per cent of its crude oil consumption.

Crude oil prices rose from about $65 per barrel in the beginning of 2010 and closed at about $92 by the close of the year.

However, Ghana hedged only 50 per cent of the 20 million barrels of monthly consumption and would have to find the resources to finance the other 50 per cent from other sources.

The economic report showed that the economic outlook for Sub-Sahara Africa is good since the economies had proven resilience in the face of the global economic down-turn. (Xinhua)