….shelter by shaky GRA defense
The anticipation among Ghanaians for an explanation from the Minister of Finance, Ken Ofori-Atta, regarding the engagement of Strategic Mobilisation Ghana Limited (SML) by Ghana Revenue Authourity (GRA) for revenue assurance remains unmet.
Despite heightened public scrutiny and documentary evidence that he instructed the transaction, Ofori-Atta appears unwilling to provide clarity, leaving citizens with unanswered questions about the decision made on their behalf.
The prevailing sentiment is that Ofori-Atta, aside from being accountable to his cousin, President Nana Akufo-Addo, does not feel obligated to justify the selection of SML. Surprisingly, even the President shows no inclination to seek answers from the Finance Minister, creating an atmosphere of opacity around the controversial decision.
Interestingly, a Public Procurement Authority (PPA) letter addressed to the Commissioner General of GRA, Ammisshadai Owusu-Amoah dated 27th September 2023, announcing the award of “upstream petroleum products and minerals and metals resources value chain audit, verification and monitoring revealed that SML was going to be US$0.75 per barrel of petroleum per a month and 0.75% of the Total Volume Value of mineral resources monitored by SML-NOVA exported per month”.
The contract document was signed by Frank Mante, Chief Executive of the PPA using the single source procurement method to further engage SML.
Analysts have observed that with an annual average of about 55 million barrels of oil produced in Ghana, SML will walk away with a whopping US$38.5 million every year for the next 5 years for virtually no work done. This analysis is bereft of what the company stands to gain from mineral resources including gold.
Both SML and the GRA have addressed the media regarding the revenue mobilization contract. SML, in particular, deflects the intensified media scrutiny, attributing it to a nefarious “Cartel in the oil ring” whose illicit activities are allegedly being disrupted by SML’s involvement. However, the Finance Ministry and Minister have yet to provide a comprehensive explanation for choosing SML’s services.
Notably, the explanations offered by both SML and GRA share similarities and lack specific details, leaving the public without a clear understanding of the numbers and intricacies of the contract. This lack of transparency adds to the growing skepticism surrounding the deal.
As Ghanaians seek accountability, the absence of concrete explanations raises concerns about the government’s commitment to transparency and openness. The parallels in the responses from SML and GRA only fuel suspicions and intensify the need for a thorough and detailed account of the decision-making process behind the revenue mobilization contract.
The story unfolds against a backdrop of public frustration, with citizens left to wonder why their leaders are hesitant to provide a clear and detailed account of a decision that directly impacts the nation’s finances. As the wait for answers continues, the air of uncertainty and suspicion surrounding the SML contract persists, underscoring the importance of transparent governance in the eyes of the Ghanaian public.
Interestingly, the controversy surrounding the engagement of SML for revenue assurance keeps deepening as the GRA remains silent on concerns raised by the Chief Executive of the National Petroleum Authority (NPA), Dr. Mustapha Hamid, and other NPA management members. Dr. Hamid expresses reservations about the possible duplication of roles, especially concerning the automatic tank gauging system.
The NPA, already equipped with a system tracking the lifting and transportation of fuel products, questions the rationale behind involving another company in a similar endeavour.
The NPA has enlisted Rock Africa to monitor tankers electronically, sending signals to the NPA Command Centre to prevent the diversion of tax-free petroleum products.
Nationwide Technologies Limited (NTL) which started under Alex Mould has also been engaged for fuel marking to counter dilution and smuggling. The GRA and NPA emphasize that revenue losses occur when oil marketing companies evade taxes, and measures were already in place to curb these practices before SML’s involvement.
The Electronic Regulatory Data Management System (ERDMS), installed by the NPA a year before SML’s engagement, comes under scrutiny.
Dr. Mustapha Hamid lauds the ERDMS for its ability to disable operators found in default of statutory margins or taxes.
Despite some skepticism, officials like Sukhwinder Singh assert that the ERDMS ensures “hundred percent” efficiency and transparency.
The Petroleum Commission led by Egbert Faibille Jnr. has also denied knowledge of the SML in a Right to Information request filed by The Fourth Estate.
A Senior Revenue Officer (SRO) of the GRA at the Tema Oil Refinery (TOR) Collection, Naomi Chartey, had also told The Fourth Estate that it is impossible to steal fuel products due to measures that had been put in place by the NPA and the GRA.
“The product is owned by the BDC [Bulk Distribution Companies], so the BDC must be in the known. Customs must be in the known, and for most of the depots, access to the depots is controlled by us. We have national security at the depots. We have NPA reps at the depots. So, by the time you are done [compromising all the players to dupe the system], you will realise that exercise is not even lucrative. Even when there are no systems, it is virtually impossible and we haven’t had such a case ever since,” Ms Chartey said.
The controversy takes a turn as The Fourth Estate’s report contradicts claims made by SML, alleging a 10-year contract and $100 million annual payments. The GRA issues a statement reaffirming the legitimacy of the SML contract, stating it is for five years and performance-based.
The GRA asserts that the consolidated contract is a risk-reward model, emphasizing that SML must provide resources for the execution, and payment is contingent on value addition.
The GRA’s board and management defend the procurement processes, following the Fourth Estate’s report. However, discrepancies in contract duration and financial terms raise concerns about the accuracy of information disseminated by both parties. The Fourth Estate’s investigation challenges SML’s assertions of saving Ghana billions, further adding to the confusion surrounding the controversial contract.
As the GRA attempts to quell the brewing storm, the attention of its Board and Management is drawn to media reports alleging a ‘questionable’ contract awarded by the Minister for Finance to SML for monitoring Upstream Petroleum Production and auditing the Minerals and Metals Resources value chain.
The unfolding saga leaves Ghanaians in a state of uncertainty, demandingclarity and transparency in a narrative clouded by conflicting statements and unanswered questions.
The story takes a political turn as allegations of nepotism surface, pointing to Ernest D. Akore, an officer at the Finance Ministry, who is accused of taking orders from Finance Minister Ken Ofori-Atta. Akore’s past association with Ofori-Atta at Databank Brokerage Ltd and his role as “Chef De Cabinet” raise concerns about undue influence.
As the controversy unfolds, SML fights back against accusations, maintaining that it operates within industry standards and that its engagement is crucial for revenue assurance. The company suggests that external forces, possibly an oil cartel, are attempting to undermine government efforts in the petroleum sector.
I Ghanaians find themselves caught in the crossfire between government assurances, industry players, and the media’s pursuit of transparency and accountability.
In response to mounting concerns and media reports, the GRA has released a detailed statement defending its engagement with SML and addressing specific points related to the controversial contract.
GRA highlights the transition from a manual measurement system, utilizing dipsticks, to the current automated system facilitated by SML. The adoption of sensors on depots ensures accurate measurement, eliminating inefficiencies and reducing the risk to officers.
It said SML’s role involves measuring oil liftings, capturing data, and reconciling it with the Integrated Customs Management System (ICUMS). Any discrepancies are addressed through collaboration with Customs and Oil Marketing Companies (OMCs), ensuring accurate reporting and taxation.
SML provides independent data beyond ICUMS, aiding in the validation of imported quantities, discharge accuracy, and tax accountability.
The statement references a review by EY Ghana and the Revenue Assurance and Compliance Enforcement (RACE) of the Ministry of Finance, confirming deficiencies in petroleum tax accounting and collection from 2015 to 2020. SML’s involvement led to extensive reconciliation efforts and a significant increase in reported figures.
GRA attributes a 33% increase in volume reporting from 2018/2019 to 2020/2021, translating to an additional 100 million liters per month and a revenue variance exceeding GHS 3 billion. This performance is linked to the introduction of ICUMS and SML systems.
Citing SML’s performance, the Ministry of Finance expanded the existing contract to include the Upstream Petroleum and Mining Sectors, aiming to minimize revenue leakages.
GRA emphasizes that the consolidated contract is for five years, not ten, and follows a risk-reward model. SML is required to provide resources for execution, and payment is contingent on demonstrated value addition.
The Board and Management assert that all legal and proper processes, including approval under Section 40 of the Public Procurement Act, Act 663, 2003, were followed in procuring SML’s services.
SML independently financed capital expenditures and technology deployment for monitoring and auditing services in the Downstream Petroleum Sector.
GRA expresses confidence in the initiatives, technologies, and revenue assurance measures, anticipating a sustained increase in revenue. The authority vows to explore additional methods to block leakages and enhance compliance, aiming for a national tax-to-GDP ratio exceeding 18%.
As the GRA releases this comprehensive response, the controversy surrounding the SML contract remains a focal point, prompting continued scrutiny and demands for transparency from various stakeholders.
