GRA backs SML
. Says contract is justified
By Isaac AIDOO, Accra
THE Ghana Revenue Authority (GRA) has mounted a spirited defense of Strategic Mobilisation Ghana (SML) Limited, justifying government’s contract with the revenue assurance and audit firm and strongly affirming SML’s response to publications by the Fourth Estate.
The tax Authority in a statement issued yesterday affirmed that, together with the Ministry of Finance, it had signed a consolidated contract with SML to “monitor and audit; Downstream Petroleum Sector (2019), Upstream Petroleum Production (2023), Minerals and Metals Resources Value Chain (2023).”
According to GRA, the new and consolidated contract of five years was agreed upon based on the performance of SML in monitoring the downstream petroleum sector and the provision of instant reconciliation of real-time data in the sector.
“GRA is confident that with the introduction of various initiatives, technology, and revenue assurance measures such as this, GRA will continue to see a significant increase in revenue such as the about 50% year-on-year increase in revenue this year,” the statement said.
GRA justifies SML contract
The Authority stated that prior to the engagement of SML, the Authority operated a manual system for the measurement of fuel in depots.
The GRA maintained that the use of dipsticks for measurement was archaic and posed a risk to officers who climbed a ladder to measure the fuel in the tankers. It was inefficient and prone to revenue leakages.
“Currently, oil deposited by the Bulk-Oil Distribution Companies in the depots is measured by SML with the aid of sensors installed on the depots (Red flow metres). During offloading from the depots, SML again measures all the various liftings of the Oil Marketing Companies,” the statement said.
The GRA explained that “SML in the petroleum sector provides additional data independent of the Customs ICUMS data capable of validating anomalies in quantities imported, discharged and accounted for by way of taxes.”
The tax Authority further explained that a revenue assurance exercise undertaken by EY Ghana and later by the Revenue Assurance and Compliance Enforcement (RACE) of the Ministry of Finance confirmed systemic deficiencies in the accounting and collection of petroleum taxes between 2015 and 2020.
“The mode of transmission of data from various sources and systems was fraught with inconsistencies resulting in loss of revenue. Extensive reconciliation had to be done on the various platforms and institutions within the Petroleum Downstream value chain to collect revenue that would have otherwise been lost,” GRA said.
SML’s work has saved billions
The GRA affirmed that the work of SML over the period had led to a significant increase in the figures reported in the downstream petroleum sector, from an average of 350 million litres per month in 2018 and 2019, to 450 million litres per month from 2020/2021.
“This represents over a 33% increase in volume reporting and an average of an extra 100 million litres per month at a levy rate of GH¢1.44p. The extra revenue variance gained for the two years will exceed GH¢3 billion. This performance is attributable mainly to the introduction of ICUMS and SML systems,” GRA stated.
The statement noted that based on the performance of SML, the Ministry of Finance directed that the existing contract of SML be expanded to cover the petroleum Upstream and the Mining Sector to minimize the risk of revenue leakages.
It said, “the consolidated contract seeks to leverage the experience, technology, and know-how of SML Ghana Limited in the Downstream Petroleum Sector and the Minerals and Metals Sector to provide revenue assurance in the Upstream.”
The Fourth Estate’s allegations
A report by the Fourth Estate raised questions about the contract’s validity, with the Finance Minister Ken Ofori-Atta expanding it and estimating a potential cost of $100 million to the state over the next decade. The report raised more questions about the operations of SML.
The Fourth Estate is a non-profit, public interest and accountability investigative journalism project of the Media Foundation for West Africa (MFWA)
SML’s response to Fourth Estate
In its response to what the company described as “a set of misrepresentations, false claims, and a general lack of understanding of the operations of the company,” SML disclosed that “the upstream operations of the company has not yet begun, and no revenue has been realized. No monies have been paid to SML.”
“The $100 million per year payment to SML that has been alleged is purely a figment of the author’s imagination and not factual,” from the company said.
While challenging the Fourth Estate to produce any evidence of wrongdoing in this contract arrangement, SML maintained that its charging formula was standard in the industry and “same is being used by other service providers in the industry.”
SML took pride in its committed and highly skilled technical team, whose combined expertise propels our success in delivering innovative solutions.
The team consists of seasoned professionals with diverse backgrounds, ensuring a comprehensive approach to addressing the most intricate technical challenges.
