The government will begin discussions this week to review the payment arrangements for Ghanaian crude oil supplied to the Tema Oil Refinery (TOR), following a directive from President John Mahama to explore settling payments in Ghana cedis rather than U.S. dollars.

The proposed policy shift aims to reduce pressure on Ghana's foreign exchange market by allowing the state-owned refinery to pay for domestically produced crude oil in local currency.

Announcing the directive at the commissioning of the refurbished Crude Distillation Unit (CDU) at the Tema Oil Refinery, the Minister for Energy and Green Transition, Dr John Jinapor, said the President had questioned the rationale behind the current arrangement, which requires TOR to purchase U.S. dollars to pay for crude oil produced in Ghana.

"He said, 'You know, when Tema Oil Refinery and Sentuo take delivery of the oil, how do they pay?' And I said, 'Mr President, in accordance with the Petroleum Holding Fund and in accordance with the Petroleum Revenue Management Act, they have to go and look for dollars and pay in foreign currency.'"

The Minister said the President immediately directed that the arrangement be reconsidered, arguing that it was inconsistent with the refinery's operations, since refined petroleum products are sold in the local currency.

"He gave me instructions. The Finance Minister and the Governor were around. He said, 'Rethink. Take a second look at it. When Tema Oil Refinery takes the crude and they process it and sell it in Ghana cedis, why don't we pay Ghana cedis into that account and use our own cedi rather than going to the forex market and buying dollars?'"

According to Dr Jinapor, the Governor of the Bank of Ghana agreed with the President's assessment, noting that the current arrangement places unnecessary pressure on Ghana's foreign exchange market.

Dr Jinapor disclosed that President Mahama has directed the Finance Ministry, the Bank of Ghana and other relevant institutions to begin discussions this week on restructuring the payment framework.

"'So next week let's have a meeting so that we can restructure that.'"

If adopted, the proposal would allow TOR to pay for Ghanaian crude oil in cedis rather than U.S. dollars, reducing the refinery's demand for foreign exchange while potentially lowering transaction costs and supporting the stability of the local currency.

The planned review forms part of the government's broader Reset Agenda, which seeks to deepen local value addition, strengthen domestic industry and reduce Ghana's dependence on foreign currency in key sectors of the economy.