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General News

The GHS3 billion lie: Ministry of Finance says it has no information on revenue losses in petroleum sector

By Evans Aziamor-Mensah Adwoa Adobea-Owusu Date: January 11, 2024
From L-R: Minister of Finance, Ken Ofori-Atta, SML MD, Christian Tetteh Sotie, Commissioner-General of the Ghana Revenue Authority, Rev. Dr. Ammishaddai Owusu-Amoah
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The Ministry of Finance, which directed the Ghana Revenue Authority (GRA) to sign revenue assurance contracts with Strategic Mobilisation Limited (SML) Ghana, has said that it does not have any information on revenue losses in the mining, petroleum downstream, and upstream sectors.

“We do not have direct information on purported reports from agencies in the petroleum and mining sectors about losses in the downstream, upstream and mining sectors,” the ministry said in a written response to a right to information request from The Fourth Estate.

The request was filed as part of The Fourth Estate’s investigation into the rationale and circumstances surrounding the execution of the so-called revenue assurance contracts between GRA and SML Ghana.

In response, the Ministry of Finance said: “The engagement with all service providers in the revenue sector, including SML, is informed and underpinned by Government policies in approved budgets since 2018. Indeed, in August 2021, Government launched the Revenue Assurance, Compliance and Enforcement (RACE) which, amongst others, is focused on identifying and eliminating revenue leakages while reinforcing the culture of compliance, especially in the areas such as petroleum bunkering, gold and minerals exports, port operations, transit goods, warehousing and free zones operations.”

The Fourth Estate’s investigations revealed that SML Ghana could be earning huge sums of money for work that was already being undertaken by several state institutions, including the GRA and the National Petroleum Authority(NPA).

Civil society groups, IMANI Africa and the Africa Centre for Energy Policy have also pointed out that if the government had considered available data from both GRA and NPA they would have realized that there was no need to contract SML Ghana. Furthermore, SML’s work has not led to any significant increase in revenue to justify its fees and charges which run into about USD24 million per year.

Meanwhile, the Petroleum Commission, which regulates the petroleum upstream sector, told The Fourth Estate during the investigation that it does not have any information on revenue leakages in the sector.

The Commission also said it does not have any knowledge of a new contract the Ministry of Finance and the GRA signed with SML Ghana to monitor revenue leakages in the petroleum upstream sector.

The Minerals Commission, which regulates the mining sector, is yet to respond to our information request, which was submitted in November 2023.

Meanwhile, the GRA, which signed the contract with SML Ghana is yet to respond to our RTI requests submitted in July and November 2023.

The Ministry of Finance has also failed to provide information on how much they have paid SML Ghana under the revenue assurance contract since 2019 and referred The Fourth Estate to the GRA.

Background

 The Fourth Estate’s investigation of how the GRA and the Ministry of Finance signed the revenue assurance contract with SML, an offshoot of a timber company in Ghana sparked a national debate and caused President Nana Akufo-Addo to order the suspension of the contract and the appointment of tax audit firm, KPMG, to investigate the scandal.

The investigation revealed that the downstream petroleum sector contract gives SML up to GHS24 million (USD2 million) a month.

The investigation also revealed that SML has been awarded an expanded consolidated contract worth nearly US$100 million a year for revenue assurance that will now include the upstream petroleum and gold mining sectors.

Managing Director of SML Ghana, Christian Sottie

The Fourth Estate investigations further found that SML had made false claims that it was checking under-reporting, diversion and dilution in the country’s downstream petroleum sector. When The Fourth Estate team pointed the false claims to the company, the Managing Director, Christian Tetteh Sottie, admitted the company was not providing those services.

“Oh no, we are not involved in diversion. We are only at the depots. If the thing [petroleum product] is lifted, we don’t know if [it is diverted],” Mr. Sottie said.

CSOs have found inconsistencies in the Ghana Revenue Authority’s (GRA) claims that the work of SML Ghana since 2019 has led to a significant increase in the volume of petroleum products

In a related development, two leading Civil Society Organisations (CSOs) in the Natural resource sector, the Africa Centre for Energy Policy (ACEP) and IMANI Africa, have found inconsistencies in the Ghana Revenue Authority’s (GRA) claims that the work of SML Ghana since 2019 has led to a significant increase in the volume of petroleum products.

“We consider as disingenuous the refusal to acknowledge that growth rates in consumption in the periods before SML’s intervention outstripped the growth rate being attributed to SML,” the two organisations said in a joint statement on Thursday, January 4, 2024.

The GRA had stated that its revenue assurance contract with SML would rake in over USD100 million annually, citing a 33% improvement in the downstream petroleum sector over the past two years.

“The work of SML over the period has led to the 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 per cent (33%) increase in volume reporting and an average of an extra 100 million litres per month at a levy rate of GHS1.44p,” The GRA said on December 20, 2023, in response to the Fourth Estate’s investigation. “The extra revenue variance gained for the two years will exceed GHS3 billion. This performance is attributable mainly to the introduction of ICUMS and SML systems.”

TAGGED:GRAKPMGMinistry of FinanceSML Ghana Scandal
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