May 26, 2024
MyNewsGh

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The Board and Management of the Ghana Revenue Authority (GRA) has denied any wrongdoing following the publication of an investigative report by the Fourth Estate alleging that the company is being paid millions of Cedis for no valuable work done.

The GRA stressed that indeed it had( and continues to have) a contract with the SML to render revenue assurance services and SML has been carrying out its mandate as expected.

In a press release reacting to the investigative report, the GRA emphasized that it has a five year contract with SML to monitor the downstream and upstream sectors and not a ten year contract has erroneously put out by the Fourth Estate.

“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 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,” the report emphasised.

GRA then defended the work of SML in assuring revenue in the petroleum downstream sector, stressing that its work has led to significant gains in taxes to the state.

“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 thirty- three percent (33%) increase in volume reporting, and an average of an extra 100 million litres per month.
 
The average volume before the period up to May 2020 was 350million litters per month. Post the implementation of the monitoring system the average volume per month for the period June 2020 to December 2022 was 450million litters
This shows a monthly average increase of 100million litters at a levy rate of GHS1.44p. the extra revenue variance gained for the two (2) years will exceed GHS3billion,” the press release explained.
 

Full press release below:

PRESS RELEASE
 
STRATEGIC MOBLISATION 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 Board and Management of GRA affirms that 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 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.
PERFROMANCE 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 risk to officers who climb 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 are measured by SML with the aid of sensors installed on the depots (Red flow metres). During offloading from the depots also, SML measures all the various Oil Marketing Companies (OMCs).
     
  2. All these pieces of information are captured and reconciled with data from the ICUMS. This is done with GRA petroleum unit. If there are discrepancies, Customs inform the OMC to enter a post-entry to correct the differences.
     
  3. 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.
     
  4. The Revenue Assurance and Compliance Enforcement identified possible loopholes to exist in the operations of the petroleum system as administered by the NPA and GRA. The Revenue Assurance Unit (RACE) decided to provide an encompassing analysis of the various data sources, that is data from NPA right to payments to the Bank of Ghana for petroleum liftings.
    The work was to ensure that all lifted petroleum products have their taxes paid and received by the Bank of Ghana into the consolidated account. In so doing, it was observed that possibility existed for fuel to be lifted for which the then Customs system did not capture. In other instance, there existed the possibility of a captured lifting not to be paid for by the OMCs.
    The findings of RACE concluded that some OMCs had liabilities that were not in the purview of the GRA Customs Division. These occurrences were possible because GRA did not have any independent means of validating data sent to their system of the quantity of fuel lifted or discharged. This raised concerns of other possible revenue leakages that needed to be addressed with a possible system adjustment (necessitating SML).
  5. 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 thirty- three percent (33%) increase in volume reporting, and an average of an extra 100 million litres per month.
     
  6. The average volume before the period up to May 2020 was 350million litters per month. Post the implementation of the monitoring system the average volume per month for the period June 2020 to December 2022 was 450million litters
    This shows a monthly average increase of 100million litters at a levy rate of GHS1.44p. the extra revenue variance gained for the two (2) years will exceed GHS3billion.
     
    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.
    The Consolidated Contract seeks to leverage the experience, technology, and knowhow of SML Ghana Limited in the Downstream Petroleum Sector and the Minerals and Metals Sector to minimize revenue losses and to provide revenue assurance in the Upstream.
     
    RESPONSE TO ALLEGATIONS BY FOURTH ESTATE
     
  7. Board and Management of 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. SML is paid for the cost of the resources plus a fee. 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
     
     
  8. The Contract is for a period of five (5) years and is performance-based and approved under Section 40 of the Public Procurement Act, Act 663, 2003. The Board and Management affirm that all legal and proper processes were followed in procuring the services of SML.
     
  9. 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.
     
     
  10. The agreed risk reward compensation in the contract is standard in the industry and takes the investments made by SML into consideration.
     
  11. The Ministry of Finance were mindful of the costs and process in procuring fresh services to monitor the Upstream Petroleum Sector and the Mineral and Metals Sector respectively and therefore found it strategic to consolidate the services into one contract.
     
     
     
    CONCLUSION
    The Board and Management wish to take this opportunity to assure the general public that no Laws have been broken.
    Board and Management are confident that with the introduction of various initiatives, technology, revenue assurance measures such as this, GRA continuous to see significant increase in revenue such as the about 50% year-on-year increase in revenue this year.
    However, there is the need to continue to explore more methods of blocking leakages in order to enable us attain the national Tax to GDP ratio of over 18%.

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Ghananewshome

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