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Renegotiate SML contract – Akufo-Addo to GRA, Finance Ministry

President Akufo-Addo has agreed to the auditing firm KPMG’s proposal to stop Strategic Mobilization Ghana Limited (SML) from providing the Ghana Revenue Authority (GRA) with upstream petroleum and minerals audit services.

“The upstream petroleum audit and minerals audit services have not yet been commenced, and no payments have been made in respect of those services; therefore, they may be terminated,” the President stated in a five-page press release on Wednesday, April 24.

“However, given that the upstream petroleum and minerals audit services could prevent significant revenue leakages, the President has directed that the Ministry and GRA conduct a comprehensive technical needs assessment, value-for-money assessment, and stakeholder engagements before implementing such services.

Also to be terminated is “The transaction audit and external price verification services may be terminated.”

KPMG’s findings indicate that GRA only received a portion of the value or benefit for such services, which was also caused by GRA’s failure to keep an eye on SML’s performance of the services as specified 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 President said.

President Akufo-Addo stated “There is a clear need for the downstream petroleum audit services provided by SML. GRA and the State have benefited from these services since SML commenced providing them.

“There has been an increase in volumes of 1.7 billion litres and an increase in tax revenue to the State of GHS 2.45 billion. KPMG also observed that there were qualitative benefits, including a 24/7 electronic real-time monitoring of outflow and partial monitoring of inflows of petroleum products at depots where SML had installed flowmeters and six levels of reconciliation done by SML.

“This minimises the occurrence of under-declarations. However, it is important to review the contract for downstream petroleum audit services, particularly the fee structure. 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. Other provisions of the contract worth reviewing include clauses on intellectual property rights, termination, and service delivery expectations.

The President stated: “To make sure SML is meeting expectations, its performance in any renegotiated contracts should be regularly reviewed and assessed. Section 33 of the PFMA should be adhered to by any renegotiated agreement.

“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.”