200 Kilograms of Gold for Every Fuel Shipment: A Solution or a Complication?

Walid Dalil
Banking Expert
The directive issued by the Governor of the Central Bank of Sudan to the Minister of Energy and Petroleum, linking the issuance of a no-objection certificate for petroleum imports to the deposit of 200 kilograms of 21-carat gold with the Sudan Gold Refinery, presents more than one paradox worthy of careful examination.
The apparent logic behind the measure seems to be an attempt to channel gold proceeds—or at least part of them—into supporting official reserves and regulating the foreign exchange flows associated with the energy sector. However, this rationale directly conflicts with the very nature of the fuel industry, a sector that can neither tolerate delays nor excessive procedural complications.
For months, Sudan has been grappling with a severe fuel crisis affecting electricity generation, transportation services, and bread production. Any new requirement that slows the approval process will, in practical terms, result in further delays before fuel shipments arrive, at a time when the market can scarcely withstand additional disruptions.
An even greater paradox is that companies engaged in the importation of petroleum products are, by nature, commercial and logistics enterprises. Most do not possess readily available gold reserves that can be mobilised at short notice. Consequently, these firms would be compelled to acquire the required quantity from the domestic gold market—a market already under significant strain and closely linked to extensive smuggling networks.
The likely outcome is that this new demand for gold could strengthen the parallel market rather than weaken it, which appears contrary to the policy’s presumed objective. Furthermore, securing such quantities of gold will be considerably easier for large importers or businesses with established relationships within mining or trading networks. This creates the risk of further market concentration in the hands of a limited number of dominant players, potentially excluding small and medium-sized companies from competition altogether.
Equally significant is the fact that the directive does not clearly explain the mechanism for recovering this in-kind guarantee, how it will be valued, or the timetable for its release. In the absence of any pricing incentive or exemption that would make the arrangement economically attractive, companies are likely to seek ways around the requirement or pass the additional costs on to consumers through higher fuel prices.
This reflects a pattern seen in previous Central Bank directives on gold, exports, and imports, in which fair pricing mechanisms have often been absent. As a result, policies risk becoming administrative procedures layered onto an already complex bureaucracy rather than practical measures that function effectively in the marketplace.
Even at the operational level, the proposed electronic linkage between the Ministry of Energy and the Gold Refinery, along with the requirement for daily coordination between the two institutions, appears reasonable in principle. However, in an environment characterised by unreliable communications, electricity shortages, and fragmented institutional capacity, such arrangements may become an additional bottleneck, prolonging rather than expediting the approval process.
Ultimately, the decision appears to represent a continuation of a broader tendency to address economic crises through top-down administrative measures rather than confronting the underlying structural challenges. These include gold smuggling, multiple exchange-rate regimes, and the weakness of the banking sector itself.
Unless the policy is accompanied by a transparent pricing mechanism and a clearly defined timetable for the release of the gold guarantee, its most immediate effects are likely to be further delays in the arrival of fuel shipments, additional pressure on the parallel gold market, and increased concentration of market power among large importers.
The fundamental question, therefore, remains: does requiring gold as collateral address the root causes of Sudan’s foreign exchange and fuel challenges, or does it simply transfer existing distortions from one market to another?

Shortlink: https://sudanhorizon.com/?p=14909