The President, Nana Addo Dankwa Akufo-Addo, has directed the Ministry of Finance (MoF) and the Ghana Revenue Authority (GRA) to renegotiate the revenue assurance contract with Strategic Mobilisation Limited (SML).
This directive follows recommendations made by Klynveld Peat Marwick Goerdeler (KPMG) International Limited, a multinational professional services network, in its audit report on SML submitted to the President about six weeks ago.
A statement issued and signed by the Director of Communication at the presidency, Mr Eugine Arhin, in Accra yesterday said the directive was in line with the president’s acceptance of recommendations in the report, which called for a review of the revenue assurance contract, to focus on improvements to enhance its effectiveness.
“There is a clear need for the downstream petroleum audit services provided by SML. GRA and the state have benefitted from these services since SML commenced providing them,” the statement said.
President Nana Akufo-Addo commissioned KPMG to investigate the contract between SML and GRA on January 2, 2024, following media reports on the contract.
The statement explained that there had been an increase in volumes of 1.7 billion litres and an increase in tax revenue of GH¢2.45 billion to the state.
The statement said that: “KPMG also observed that there were qualitative benefits, including a 24/7 electronic real-time monitoring of outflow and partial monitoring of inflows of petroleum products at depots where SML had installed flow metres and six levels of reconciliation done by SML.”
It said the president had directed a review of the contract between GRA and SML for downstream petroleum audit services, specifically the fee structure, due to SML’s experience and proficiency.
The fee structure will be changed from variable to fixed, and other contract provisions will also be reviewed, including intellectual property rights, termination clauses, and service delivery expectations.
The statement, however, said the president had accepted recommendation to terminate the upstream petroleum and minerals audit service provided to the Ghana Revenue Authority (GRA) by SML.
Since the upstream petroleum and minerals audit services have not started yet and received no payments, the president directed that it may be terminated.
The statement said the MoF and the GRA were to give effect to all the directives immediately, and provide the Office of the President with an update on the steps taken.
Reacting to the statement from the presidency, SML, through a press release signed by Yaa Serwaa Sarpong, its Director of Support Services, said the report had vindicated the company from allegation of $100 million payment and a 10- year contract.
It also said the KPMG’s report confirmed the importance of SML’s services in the upstream and minerals sectors, highlighting the need for revenue assurance audit services.
However, SML disputed KPMG’s quoted figure of GH¢1,061,054,778.00 as compensation, citing omission of taxes, interest payments, and investment repayments.
It also rejected KPMG’s assertion of partial delivery on contract requirements, stating they fully delivered on their obligations, including real-time monitoring and revenue loss prevention.
SML disagree with the findings that a need assessment was not done before SML commenced operations and asserted that the award of the Performance-Driven Contract was in full compliance with the Public Procurement Act (Act 663), as amended.
“SML disagrees with KPMG’s findings regarding the realised petroleum volumes and the tax revenue realised as a result of the compliance tools that led to increased volumes.
“During the audit, KPMG used NPAs / ESLA Volumes to evaluate the performance of the downstream petroleum to determine GRA tax revenue. SML strongly contended in writing to KPMG during its audit that NPAs / ESLA’s Volumes are Lifting or Trading Volumes but not GRA Taxable Volumes,” it said.
The statement further conveyed SML’s contention that NPAs / ESLA Volumes cannot be used for performance computation.
BY CLIFF EKUFUL
