President Akufo-Addo says the Strategic Mobilization Ghana Ltd (SML) Downstream petroleum service is needed however the Ministry of Finance (MoF) and the Ghana Revenue Authority (GRA) will have to renegotiate the fee structure.
In a statement signed by the Director of Communication at the Presidency, Eugene Arhin disclosed that President Akufo-Addo, on Wednesday, 27th March 2024, received the final report of the audit conducted by KPMG regarding the transactions between the Ghana Revenue Authority (GRA) and Strategic Mobilization Ghana Ltd (SML).
He added that the President has acted on the findings and recommendations of KPMG, and has, by letter dated Thursday, 18th April 2024, given directives to the Ministry of Finance and the Ghana Revenue Authority.
“There is a clear need for the downstream petroleum audit services provided by SML. GRA and the State have benefited from these services since SML commenced providing them. There has been an increase in volumes of 1.7 billion litres and an increase in tax revenue to the State of GHS 2.45 billion.
“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 flowmeters and six levels of reconciliation done by SML. This minimises the occurrence of under-declarations. However, it is important to review the contract for downstream petroleum audit services, particularly the fee structure.
“Given the experience and proficiency of SML over the last four years of providing this service, the President has directed that the fee structure be changed from a variable to a fixed fee structure. Other provisions of the contract worth reviewing include clauses on intellectual property rights, termination, and service delivery expectations.”
Meanwhile, the President says two other contracts may be terminated.
“The upstream petroleum audit and minerals audit services have not yet been commenced, and no payments have been made in respect of those services; therefore, they may be terminated.
“However, given that the upstream petroleum audit and minerals audit services could prevent significant revenue leakages, the President has directed that the Ministry and GRA conduct a comprehensive technical needs assessment, value-for-money assessment, and stakeholder engagements before implementing such services.
“The transaction audit and external price verification services may also be terminated. According to KPMG’s findings, GRA obtained partial value or benefit for those services. This was also due to a lack of monitoring on the part of GRA to ensure that SML performed the services as stipulated in the contracts. KPMG’s investigation found that GRA has introduced external price verification tools as part of ICUMS, among its other functions.”
According to him, GRA introducing external price verification tools renders the reliance on SML for external price verification redundant.
Attached below is the full statement
