President Akufo-Addo
President Akufo-Addo has asked the Ghana Revenue Authority (GRA) and the Ministry of Finance to renegotiate the revenue assurance contract with the Strategic Mobilisation (Ghana) Limited (SML), changing the fee structure from variable to fixed.
According to the President, there is a clear need for the downstream petroleum audit services provided by SML.
He stated that the GRA and the state have benefited from these services since SML began offering them, with an increase in volumes of 1.7 billion litres and an increase in tax revenue to the state of GH¢2.45 billion.
“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,” he stressed in the statement released to the media yesterday.
The statement, signed by the Director of Communications at the Presidency, Eugene Arhin, pointed out that President Akufo-Addo also wants other provisions of the contract, such as those governing intellectual property rights, termination, and service delivery expectations, to be addressed in the renegotiated contract.
“SML’s performance in any renegotiated contracts should be monitored and evaluated periodically to ensure that it meets expectations,” the President ordered.
The statement said the President had accepted the KPMG’s recommendations after reviewing the audit report, and directed that “any renegotiated contract should be compliant with Section 33 of the PFM Act.”
“The Ministry of Finance and the Ghana Revenue Authority are to give effect to the above directives of the President immediately, and provide the Office of the President with an update on the steps taken,” the statement noted.
According to the statement, President Akufo-Addo stated that the upstream petroleum audit and minerals audit services have not yet begun, and no payments have been made for them, therefore they may be terminated.
However, because upstream petroleum and minerals audit services have the potential to prevent significant revenue leakages, the President again directed that the ministry and GRA conduct a comprehensive technical needs assessment, value-for-money assessment, and stakeholder engagements before implementing such services.
He said the transaction audit and external price verification services may also be terminated.
Quoting the KPMG’s findings, the President disclosed that the GRA obtained partial value or benefit for those services, and noted that 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. This renders the reliance on SML for external price verification redundant,” the statement pointed.
Regarding the downstream petroleum audit services, the President said KPMG determined that there was an incremental volume of 1.7 billion litres and an incremental tax revenue of GH¢2.45 billion for the period under review.
“There were also qualitative benefits, including a 24/7 electronic real-time monitoring of the outflow and partial monitoring of inflows of petroleum products at depots where SML had installed flowmeters.
“This serves as a deterrent for under-declarations. Other qualitative benefits include six levels of reconciliation done by SML to prevent revenue losses to GRA and the sharing of discrepancy reports with GRA to follow up,” the statement said.
It noted that SML had yet to implement the upstream petroleum audit and minerals audit services, and therefore, there could be no assessment as to whether GRA would derive value or benefit from that service.
By Ernest Kofi Adu