2012 Budget Statement: Ghana to allocate specific funds for hedging of crude oil imports

Ghana is set to announce a specific budgetary allocation to fund hedging of crude oil imports which started October 2010 when the 2012 budget statement is read next month November, an official at the Ministry of Finance and Economic Planning (MoFEP) has disclosed without given details.

The country sometimes funds the hedging programme from issuance of sovereign bonds.

“But the bond settlement is an attractive option that we still retain even though I am confident that the minister of finance will stipulate a specific budgetary allocation for funding the hedging programme when the national budget statement is presented to parliament in November,” Mr Kwame Okyere-Mensuo, Technical Adviser at MOFEP told Energy Risk news publication in an interview October 5, 2011.

“The programme is here to stay. We’re already thinking about next year, and I think it will be even more vigorously pursued than we have done before – I have the assurance from the minister and other stakeholders that this will continue,” Mr Okyere-Mensuo told the publication.

He said the country has earned more than $70 million from government’s import hedging programme.

Ghana is said to be hedging 50% crude oil imports at $82 per barrel.

Hedging is an arrangement that allows a buying party to purchase a product at an agreed rate in future by paying a premium now to international insurance and oil companies based on a pre-determined maximum rate at which the country would buy the product.

By this arrangement, when prices rise in future above that pre-determined rate, the country will still buy the product at the agreed rate.

By Ekow Quandzie