Home Business GRA stands by SML Ghana in GH¢3 billion savings claim

GRA stands by SML Ghana in GH¢3 billion savings claim

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Ghana Revenue Authority (GRA)
Ghana Revenue Authority (GRA)

The Ghana Revenue Authority (GRA) has declared its full support to the claim by Strategic Mobilization Limited (SML) Ghana that the company saved the state over GHS3 billion between 2020 and 2021. 

This comes after a documentary by The Fourth Estate showed the CEO of SML, Christian Tetteh Sottie saying that he had no idea about SML saving government GHS3 billion and that some of the claims on the company’s website are in fact not correct. He also said the GHS3 billion figure was a misrepresentation by the Ghanaian media.

Find the full statement below:

STRATEGIC MOBILISATION LIMITED REVENUE ASSURANCE CONTRACT 

The attention of the Board and Management of Ghana Revenue Authority (GRA) has been  drawn to a publication made by The Fourth Estate on its website on 18th December 2023 and  subsequent publications in various media. 

The Publication alleges that the Hon.Minister for Finance has awarded a ‘’questionable’’  contract to Strategic Mobilization Ghana Limited (SML) to monitor Upstream Petroleum  Production and to Audit the value chain of Minerals and Metals Resources.  

BACKGROUND TO CONTRACT  

The GRA affirms that, together with the Ministry of Finance, it has signed a consolidated  contract with SML to monitor and audit; 

(a) Downstream Petroleum Sector (2019)  

(b) Upstream Petroleum Production (2023)  

(c) Minerals and Metals Resources Value Chain (2023)  

The new and consolidated contract which is for a term of five (5) years and not ten (10) years  (as alleged by the publication) 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. 

PERFORMANCE OF DOWNSTREAM PETROLEUM ASSURANCE CONTRACT 

  1. Prior to the engagement of SML, GRA operated a manual system for the measurement  of fuel in depots. 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 (OMCs). 

www.gra.gov.gh 

  1. All these pieces of information are captured and reconciled with data from the ICUMS.  This is done with the GRA petroleum unit. If there are discrepancies, Customs inform  the OMC to enter a post-entry to correct the differences. 
  2. 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. 
  3. The 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.  
  4. The work of SML over the period has 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  thirty- three per cent (33%) increase in volume reporting and an average of an extra  100 million litres per month at a levy rate of GHS1.44p. The extra revenue variance  gained for the two (2) years will exceed GHS3 billion. This performance is attributable  mainly to the introduction of ICUMS and SML systems. 

THE CONSOLIDATED CONTRACT 

Based on the performance of Strategic Mobilization Ghana (SML) Limited, 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. 

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. 

RESPONSE TO ALLEGATIONS BY FOURTH ESTATE  

  1. GRA restate that the consolidated contract which is a risk-reward contract seeks to  bring efficiency in Revenue Assurance Services provided to GRA. SML per the contract  is required to provide resources for the execution of the contract. By implication, if there  is no value addition, SML is not paid. In short, the principle of risk and reward is the  fulcrum of the contract.  
  2. The Contract is for five (5) years and is performance-based and approved under  Section 40 of the Public Procurement Act, Act 663, 2003. The Board and Management 

www.gra.gov.gh 

affirm that all legal and proper processes were followed in procuring the services of  SML. 

  1. SML solely financed the capital expenditures and cutting-edge technology that is  employed in the monitoring and auditing services provided to GRA in the Downstream  Petroleum Sector. 

CONCLUSION  

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. 

However, GRA will continue to explore more methods of blocking leakages and increasing  compliance to enable us to attain a national Tax to GDP ratio of over 18%. 

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