GRA affirms SML’s role in GH¢3bn revenue increase over 2 years

The technology employed by the embattled revenue assurance and audit firm Strategic Mobilization Limited (SML) has been the primary factor responsible for an additional GH¢3billion in revenue to the state over the past two years, the Ghana Revenue Authority (GRA) has confirmed.

In an official statement, the GRA acknowledged the impact of SML’s technology, coupled with the Integrated Customs Management System (ICUMS), in boosting reported volumes of petroleum products.

The downstream petroleum sector witnessed a 33 percent increase in volume reporting, translating to an extra 100 million litres per month at a levy rate of GH¢1.44p.

This contributed to a total additional revenue exceeding GH¢3billion for the period, with GRA attributing this success mainly to the introduction of ICUMS and SML systems.

“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 a thirty- three percent (33%) increase in volume reporting and an average of an extra 100 million litres per month at a levy rate of GH¢1.44p. The extra revenue variance gained for the two (2) years will exceed GH¢3billion. This performance is attributable mainly to the introduction of ICUMS and SML systems,” GRA elaborated.

Reason for engagement

The GRA said it moved to replace its manual dipstick fuel measurement system with SML’s Red flow metres in depots ensures accurate measurements during offloading, covering various liftings of Oil Marketing Companies (OMCs).

This data is reconciled with the Integrated Customs Management System (ICUMS) to identify and correct discrepancies.

SML also provides independent data, crucial for validating anomalies in quantities imported, discharged and taxed.

An audit by EY Ghana and the Ministry of Finance’s Revenue Assurance and Compliance Enforcement (RACE) uncovered systemic deficiencies in petroleum tax accounting from 2015 to 2020. Inconsistencies in data transmission across platforms led to significant revenue losses, prompting extensive reconciliation efforts within the petroleum downstream value chain.

Says who?

This comes as the services of SML in the nation’s downstream and potentially upstream and minerals sub-sectors have come into questioning over their appropriateness.

A documentary by investigative outfit – The Fourth Estate – cast aspersions on SML’s claim of aiding the GRA to raise more revenue by plugging existing gaps and giving a more accurate reading of products transferred from depots to the outlets.

Industry actors further suggested that SML’s ultrasonic flow detection metres were replicating a service already being undertaken by the industry regulator without adding any extra value. They expressed further discontentment with the value and supposed length of the consolidated contract, which would see SML expand its scope to include the upstream sector and mining.

But offering further clarification, the GRA stated that the contract was performance based, meaning SML will only receive payment if it succeeds in recovering additional tax revenue for the government.

Also, the GRA pointed out that no upfront costs are borne by the government, and SML is not exempt from any taxes or duties.

It also confirmed that the contract is for a five-year period and not 10 years as reported.

“GRA restates 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. 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.

“The contract is for 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.

“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.”

 

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