Home » GRA’s $3 Billion Discrepancy: SML Contract Under Fire

GRA’s $3 Billion Discrepancy: SML Contract Under Fire

CSOs Challenge GRA's Petroleum Revenue Claims; President Orders Audit

by Oluwatosin Racheal Alabi

In a recent development shaking Ghana’s petroleum sector, two prominent Civil Society Organisations (CSOs) – the Africa Centre for Energy Policy (ACEP) and IMANI Africa – have challenged the Ghana Revenue Authority’s (GRA) claims regarding the effectiveness of SML Ghana’s contract in increasing petroleum product volumes. This critique unfolds amid GRA’s assertion that its partnership with SML has significantly boosted the downstream petroleum sector, a statement now under scrutiny for its accuracy.

The CSOs have raised concerns over GRA’s failure to acknowledge that growth rates in petroleum product consumption were higher before SML’s intervention. According to a joint statement released on January 4, 2024, the CSOs argue that GRA’s portrayal of SML’s impact is misleading, particularly in the context of growth rates prior to SML’s involvement.

GRA had previously stated that its revenue assurance contract with SML would generate over $100 million annually. They attributed this to a 33% improvement in the sector over the past two years, citing an increase in monthly volume reporting from an average of 350 million litres in 2018 and 2019 to 450 million litres in 2020/2021. However, the CSOs have countered this claim, presenting data from the Ministry of Finance and the National Petroleum Authority (NPA) that contradicts GRA’s assertions.

The CSOs’ analysis reveals a different picture. For instance, in 2019/2020, the year SML began operations, GRA’s data showed only a 5% growth in refined petroleum product consumption, compared to a 7% growth reported by the NPA. The following year, both GRA and NPA data indicated an 11% and 10% growth, respectively. This pattern challenges GRA’s narrative of a drastic improvement attributable to SML’s intervention.

Furthermore, the CSOs pointed out that the actual growth between 2018/2019 and 2020/2021 was approximately 62.95 million litres according to NPA data, and 60.15 million litres from GRA data. In the 2021/2022 year, total consumption of refined products in the country declined by 5% and 7% as per NPA and GRA respectively, casting further doubt on the supposed efficacy of SML’s involvement.

SML’s data has been accused of being inflated to justify its contract with GRA. The CSOs highlighted discrepancies in SML’s data for three key petroleum products compared to the data presented by GRA to the Ministry of Finance. These inconsistencies have raised questions about the reliability of SML’s data for tax purposes, with GRA’s Customs officers affirming these doubts during The Fourth Estate’s investigation.

The investigation also revealed that the meters employed by SML are not used for revenue calculation, further undermining the claimed impact of SML’s work. This revelation, coupled with the concerns about data accuracy, has led to criticisms regarding the substantial payments made to SML, amounting to between GH₵700 million and GH₵750 million so far.

Additionally, the CSOs have criticized SML’s share of royalty of $0.75 per barrel of petroleum as contrary to the principles of the Petroleum Revenue Management Act (PRMA), labeling it as a misuse of state resources.

In response to these findings, President Akufo-Addo has directed the suspension of the controversial SML contract and ordered an audit by KPMG. The SML contract, initially intended for revenue assurance in the downstream petroleum sector, was expanded to include the upstream petroleum and gold mining sectors, worth nearly US$100 million annually. However, The Fourth Estate’s investigation uncovered false claims by SML regarding its role in monitoring under-reporting, diversion, and dilution in the petroleum sector.

These revelations have led to calls for a thorough examination of all revenue assurance contracts across various sectors to ensure value for money and effective resource management. The case of SML and GRA underscores the need for greater transparency and accountability in public-private partnerships, particularly in sectors as crucial as petroleum and natural resources. The outcome of this investigation and the subsequent actions by the government will be closely watched, as they hold significant implications for fiscal management and public trust in Ghana.

You may also like

Leave a Comment

white logo with motto small

The Ghana Sentinel is an embodiment of Ghana’s spirit, providing unerring insight into our politics, society, and business.

Editors' Picks

Latest Stories

© 2024 The Ghana Sentinel. All Rights Reserved.

Social Media Auto Publish Powered By : XYZScripts.com