SML contract renegotiation: Publish full KPMG report – Bright Simons to Akufo-Addo

Bright Simons, a vice president of IMANI Africa, has called on President Nana Addo Dankwa Akufo-Addo to let Ghanaians know the details of the KPMG report on the abrogated Strategic Mobilisation Limited (SML) contract.

The IMANI Africa vice president’s demand comes after an order by President Nana Addo Dankwa Akufo-Addo for the Ghana Revenue Authority (GRA) and the Ministry of Finance to renegotiate the revenue assurance contract with SML.

In a statement sighted by GhanaWeb, Bright Simons indicated that the president instructing the renegotiation of the SML contract is not enough.

He pointed out that the report by KPMG pointed out serious issues that the government seems to be attempting to whitewash.

“… we are seriously disappointed by a number of elements of the President's ‘whitepaper’. We insist on seeing the full KPMG report. We dispute their apparent claim that any increase in petroleum consumption in Ghana should be attributed to SML. We demand an open forum to show that the weight of expert opinion in Ghana is against any such flawed reasoning.

“Multiple petroleum economists are on standby to prove that no gains in consumption volume can be attributed to SML's work. We also have tax specialists on standby to prove that no tax gains due to SML's work can be ascertained to have occurred,” Simons wrote.

He added, “The needs assessment mentioned by the President must be concluded before SML or any other company receives a pesewa more of Ghana's money. The 24 million GHS a month SML is currently taking is unconscionable. Civil Society activists in the energy sector have lined up a long list of specialists willing to support a value for money and needs assessment pro bono”.

Background:

President Akufo-Addo in a press statement released by the Communications Director of the Presidency, Eugene Arhin, instructed the GRA and the Ministry of Finance to renegotiate the SML contract.

The president emphasized that the renegotiation should be closely monitored and evaluated periodically to ensure it meets expectations.

"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," he wrote.

The decision to renegotiate the contract follows the president's acceptance of the recommendation by KPMG after its audit of the deal.

The audit findings prompted the need for a review of the revenue assurance contract, highlighting areas where improvements are necessary to enhance its effectiveness.

On January 2, 2024, President Nana Akufo-Addo commissioned KPMG to investigate the contract between SML and GRA, prompted by an exposé by media outfit, the Fourth Estate.

President Nana Addo Dankwa Akufo-Addo has since received the KPMG audit report regarding the revenue mobilisation contract between GRA and SML.

The report was delivered to him on Wednesday, March 27, as announced in a Facebook post by Eugene Arhin, the Director of Communications at the Presidency, on Wednesday, April 3.

Read Bright Simons's statement below:

Comment to the Press on KPMG Report re SML Contract

It is helpful that the President of Ghana accepts that infractions occurred in the award of the SML contracts, that have so far netted the company more than 1 BILLION GHS. It was inevitable that the attempt to extend this same troubling arrangement to the mining & petroleum drilling sectors for an additional ~$100 million a year would not stand scrutiny, so the decision to halt that process was expected. As is also widely known, the pre-shipment inspection work SML took from West Blue and was being paid for was a duplication of existing services. The President has finally come to that same conclusion.

The Presidency's "whitepaper" also acknowledges that substantial work must be done to determine the country's needs before the award of any contracts for revenue assurance in the "downstream" fuel market (especially the linkages between the wholesale depots and fuel retail outlets). And it is a no-brainer that if any company is to render any service in this area at all, then they must receive a fixed fee and not be paid percentages of taxes collected by the State, which was the case in the now suspended SML contract.

However, we are seriously disappointed by a number of elements of the President's "whitepaper". We insist on seeing the full KPMG report. We dispute their apparent claim that any increase in petroleum consumption in Ghana should be attributed to SML. We demand an open forum to show that the weight of expert opinion in Ghana is against any such flawed reasoning.

Multiple petroleum economists are on standby to prove that no gains in consumption volume can be attributed to SML's work. We also have tax specialists on standby to prove that no tax gains due to SML's work can be ascertained to have occurred.

The needs assessment mentioned by the President must be concluded before SML or any other company receives a pesewa more of Ghana's money. The 24 million GHS a month SML is currently taking is unconscionable. Civil Society activists in the energy sector have lined up a long list of specialists willing to support a value for money and needs assessment pro bono.

We are thus challenging the President to accept this patriotic offer. Not one pesewa more of Ghana's money should go to SML or any other company until such an open, transparent, rigorous, and meritocratic process has been completed.

--- Bright Simons

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