Christian Sottie, MD SML
It has emerged that revenue assurance and audit firm, Strategic Mobilisation Ghana Limited (SML), has a five-year contract with the Ghana Revenue Authority (GRA).
The Fourth Estate, a news website operated by the Media Foundation for West Africa (MFWA), has claimed the company was awarded a 10-year contract.
But a letter from the Public Procurement Authority (PPA) dated September 27, 2023 authorised the GRA to re-engage SML for the expansion of scope of work to include Upstream Petroleum Products and Minerals and Metals Resources Value Chain Audit, Verification and Monitoring for a duration of five (5) years at a service fee of US$0.75 per barrel of petroleum.
The PPA’s approval granted the GRA to use the single source procurement method, in accordance with Section 40 (1) (d) of Act 663 as amended.
The approval was given at the 46th Board Meeting of the PPA Board held on Wednesday, September 20, 2023.
The Fourth Estate website claimed in its report that its investigation had uncovered that at the time players in the downstream petroleum sector were questioning the relevance of SML’s involvement, the Minister of Finance, Ken Ofori Atta, initiated a more “outrageous deal that would entitle the company to over $100 million every year for the next 10 years.”
It alleged that the company made a number of misleading declarations, and that when The Fourth Estate contacted the Managing Director of SML, Christian Tetteh Sottie, he said he was unaware of the amount, an allegation he has denied.
Also, the contract itself has not started, and that the claims about the company receiving $100 million yearly per his projections is again not true.
Since 2020, SML has provided revenue assurance services to the Ghana Revenue Authority.
Its work, which includes the petroleum downstream industry, guarantees that illegalities that result in under-declarations and under-reporting of petroleum product quantities, resulting in revenue losses to the state, are eliminated.
This has put the company on a collision course with downstream petroleum cartels who have previously benefited from similar illegalities.
Company’s Reaction
In a release issued yesterday, the company has described the documentary as representing a set of misrepresentations, false claims, and a general lack of understanding on the entire operations of the company.
“We challenge Fourth Estate to produce any contract anywhere that is for a 10-year period. The 5th PPA Board at its 46th Board meeting in a letter referenced PPA/CEO/09/2286/23 approved a contract duration of five (5) years.
“Again, it’s NOT TRUE that SML takes $100 million annually from its contract. The contract, which is yet to be operationalised, per their projections leads them to that claim. The Upstream operations of the company have not yet begun, and no revenue has been realised. 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.”
SML’s engagements with GRA, according to the release, “is solely a risk reward contract. GRA invests nothing in the entire investment chain. There is no cost commitment from the GRA.”
SML is not exempted from the payment of duties and taxes, the statement went on, adding “31% of SML’s would-be monthly earnings goes to GRA as taxes per the law.”
A good-intentioned and professional investigation would have established SML’s investments cost and compared to its earnings to make an informed position, states SML.
Challenge
SML has challenged The Fourth Estate to produce any evidence of wrongdoing in this contract arrangement. SML’s charging formula is standard in the industry and same is being used by other service providers in the industry, the company maintained.
Explaining further, the company disclosed that “SML’s work forms the base data at the depots for revenue assurance and auditing. They declare the base volumes upon which any gap or deficit in the eventual volumes declared will expose those in the chain.
“The downstream petroleum sector’s reported figures have significantly increased because of SML over the time; from an average of 350 million litres per month in 2018 and 2019, to 450 million litres per month as of June 2020.
“This indicates a rise of more than thirty-three percent (33%) in volume reporting, and an average of an extra 100 million litres per month which translates into revenue. Revenue solutions, our business!!!
A careful scrutiny of the work of NPA in terms of taking account and reporting the transactions using ERDMS within the downstream petroleum sector, SML stated, would show that it was not adequate and suited in giving revenue assurance to GRA, adding “the NPA system was designed for its operations and was not suited for providing revenue assurance for tax purposes.
“SML installed ultrasonic flow meters to check the volumes of petroleum products loaded at the gantries from the depots to reconcile in real time, with the volumes recorded in ICUMS, stated the company.
Customs Assurance
This system additionally assures Customs that no loading activities occur in the depot in their absence, SML stressed.
“The installed metering system is designed to detect and record the movement of petroleum products at the depots.
“SML’s work is designed to culminate in the checking of the products in the tank using automatic tank gauging system,” it disclosed, adding that “this aims at replacing the current system of Custom Officers climbing the tank using a dip stick to measure fuel volumes. By utilising this, the GRA, they said, “can calculate the overall quantity of petroleum products in depots nationwide to gauge revenue, provide Customs with data for reconciliation, and facilitate the tracking of oil movements during inter-depot and inter-tank transfers.”
Moreover, this aids in identifying leaks and notification of overfills, the statement explained.
Highly Skilled Team
SML takes pride in its committed and highly skilled technical team, whose combined expertise propels our success in delivering innovative solutions, the statement pointed out.
“The team consists of seasoned professionals with diverse backgrounds, ensuring a comprehensive approach to addressing the most intricate technical challenges. The SML technical team comprises Ghanaian-trained engineers and expatriates from the United States, with work experience ranging from five (5) to 25 years in the petroleum industry and the instrumentation and controls sector. The team’s expertise spans across petroleum engineering, process engineering, IT System Engineering, Cybersecurity Engineering, Instrumentation, and Controls, as well as Electrical and Mechanical Engineering.”
Undermining Government
SML explained that they are aware of the heightened efforts by the cartel in the oil ring whose illegal trade is being collapsed and is fighting to undermine government’s fight against illegalities in the petroleum sector.
By Ernest Kofi Adu