Normal letter of credit (L/C) procedures have been shelved in a deal meant to secure supplies of Nigerian oil to a Ghanaian refinery. The deal follows months of negotiations between Nigeria and Ghana - which included interventions from the presidents of both countries - apparently aimed at solving the problem of Ghana's persistent fuel shortages.

The Ghanaian government - which came into office last December - has come under some criticism for its part in the agreement struck with Nigeria. In March 2001, Sahara Energy Resources (SER) was awarded a contract to lift 30,000 barrels per day of Nigerian crude oil for delivery to the Tema Oil Refinery (TOR) in Ghana.

Concerns over ownership and transparency

Several aspects of the deal concern Ghanaians. SER is a Nigerian company, with no Ghanaian shareholders or directors established in 1995 by the state-owned Nigerian National Petroleum Company (NNPC) as a trading company for crude oil and refined products.

Critics also say the deal struck by the new Accra government lacks transparency. Minister of Energy Albert Kan-Dapaah in June defended this charge by reasoning that fuel shortages had been so severe that "we certainly did not have the benefit of time to consider competitive tendering." Kan-Dapaah said TOR had examined two proposals - from SER and one from another Nigerian company nominated by NNPC.

Government credit guarantees

Under the terms of the twelve-month agreement - which may be extended - Ghana was offered a 90 day credit period in which to pay for crude oil deliveries to TOR.

The government has agreed to guarantee through the Bank of Ghana, all L/Cs established under the agreement. The normal requirements to establish credits acceptable for confirmation by international banks have been waived and replaced with government-guaranteed L/Cs by local commercial banks. These do not require confirmation by international banks.

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