Akufo-Addo directs action on GRA-SML deal

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April 29, 2024
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President Nana Addo Dankwa Akufo-Addo has responded to an audit conducted by KPMG regarding the transactions between the Ghana Revenue Authority (GRA) and Strategic Mobilization Ghana Ltd (SML), directing that the upstream petroleum audit and minerals audit services by the latter may be terminated.

The directive was contained in a statement released by the Communications Director at the Office of the President, Eugene Arhin, yesterday.

According to the statement, the President also directed that the transaction audit and external price verification services could also be terminated because the GRA obtained only partial value or benefit from these services, partly due to a lack of monitoring.

“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 statement said.

The President noted that although there was a clear need for the downstream petroleum audit services provided by SML, the fee structure needs review, directing a shift from a variable to a fixed fee structure and a review of other contract provisions.

The President further directed that any renegotiated contracts with SML must undergo periodic monitoring and evaluation to ensure compliance and performance.

“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,” it said.

The statement explained that “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 also tasked the Ministry of Finance and the Ghana Revenue Authority with the immediate implementation of these directives and provision of updates to the Office of the President on the progress made.

President Akufo-Addo thanked KPMG their thorough audit, reaffirming his commitment to transparency and efficiency in government operations.

KPMG found out that no technical needs assessment was done before the engagement of SML. However, such an assessment was not legally required for engaging SML. After SML was engaged, a Chamber of Bulk Oil Distributors’ industry report, a 2021 Ernst & Young audit report commissioned by GRA and a report by the Revenue Assurance and Compliance Enforcement of the Ministry of Finance, all found that there might be underreporting, under-declaration and potential revenue leakages.

KPMG revealed that on three occasions (between June 2017 and September 2017), GRA sought approval from the Public Procurement Authority to use the single source procurement method to engage SML to provide transaction audit services. PPA did not grant approval. Subsequently, it found out that GRA engaged SML as a subcontractor to West Blue which was already providing services to GRA at the port. SML eventually took over the services provided by West Blue when the latter’s contract came to an end on 31st December 2018. GRA then added external price verification to the services offered by SML and signed a downstream petroleum audit agreement with SML.

All these were done without PPA approval. Following a change of leadership at GRA, the new leadership sought to regularise the contracts with SML, and on August 27, 2020, PPA ratified the procurement processes used to engage SML. In 2023, the Ministry of Finance (MoF), GRA, and SML entered into a Revenue Assurance Services Contract (“2023 Contract”). The 2023 Contract extended the scope of SML’s services to include upstream petroleum and minerals audit.

PPA approval was obtained for the contract, which is now the governing agreement for the services offered by SML to GRA. Another issue raised by KPMG is the absence of parliamentary approval for the contracts, given that they are multi-year contracts. Under section 33 of the Public Financial Management Act, 2016 (Act 921) (“PFMA”), such contracts must have ministerial and parliamentary approval.

KPMG also found that there was no evidence that the 2018 and 2019 contracts (transaction audit services, external price verification, and downstream petroleum audits) were submitted to the GRA Board for discussion and approval, contrary to the GRA Act, Corporate Governance Manual for Governing Boards/Councils of the Public Services and sound and accepted corporate governance practices.

The GRA Board approved the extension of SML’s services to cover the auditing of the upstream petroleum and minerals sectors, as specified in the 2023 Contract.

Regarding the transaction audit services, KPMG concluded that SML partially delivered on the service requirements. “However, given the observations made during the investigations, GRA may not have obtained all the expected benefits from the service,” it said.

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October 7, 2024
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1 minute Read

Minerals Commission refutes understaffing claim

The Minerals Commission of Ghana has firmly refuted claims of understaffing, asserting that it possesses adequate resources to fulfil its inspection and regulatory duties.

Speaking during a parliamentary hearing before the Government Assurances Committee yesterday, Martin Ayisi, the Chief Executive Officer of the Commission, addressed concerns regarding reports of staffing challenges.

Ayisi reassured the committee that the Commission had both the personnel and logistics needed to effectively oversee the mining sector.

Ayisi’s remarks come in response to widespread reports suggesting the Commission was facing operational difficulties due to staffing shortages.

However, the CEO confidently dismissed these allegations, emphasizing that the Commission was well-equipped to manage its responsibilities efficiently.

“Capacity-wise, I think we’re okay. I was listening to the news this morning, and I heard one of the radio stations talking about capacity, [that] we’re understaffed; it’s not the case. In fact, I heard someone say that our 7 inspectors have been dismissed, but that is not the case.

“In terms of resources for training, in terms of resources to hire more people, we are okay,” he said.

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October 7, 2024
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3 minutes Read

Economic turnaround driving companies back to Ghana- Finance Minister

The Minister of Finance, Mohammed Amin Adam, says foreign companies are returning to Ghana due to the country’s economic rebound.

He said that just as it was heard of some foreign companies exiting the country due to economic hardship, many had started returning, owing to the positive growth in the first half of 2024.

“We were told that some companies left Ghana when the economy went down, and it’s important to note that companies are returning to Ghana because they see that the growth trajectory is positive,” he said.

“The latest is Virgin Atlantic (an airline company that left the country in 2013), which said only yesterday (October 6, 2024) that they’ve returned to Ghana to operate as an airline because they see economic recovery,” he noted during the second Quarterly Economic Roundtable discussion yesterday in Accra.

The event, jointly organised by the Ministry of Finance and the University of Ghana, was under the theme “Driving economic growth through Small and Medium-sized Enterprises (SMEs).

The Finance Minister indicated that some other companies were also returning to the country, but yet to be heard of.

“Let’s get ready for them to build strong partnerships, and use that capital, expertise, and technology that they’re bringing in so that we can leverage them to support the growth of the economy,” Dr Amin Adam told Ghanaian businesses.

Referencing figures from the Ghana Statistical Service (GSS), he stated that the economic growth for 2024 was exceeding every expectation, prompting major analysts and keen observers to revise their projections upwards.

The Minister noted that the country’s half-year Gross Domestic Product (GDP) growth of 5.8 percent for 2024 was the highest in the last five years, which was a testament that the economy was “back on track.”

“It is fascinating to note that the growth of 4.8 percent in quarter one and 6.9 percent in quarter two was driven largely by industry and agriculture sectors, for quarter two, all three sectors, including services drove the growth,” he said.

“What this means is that we are back on track. It also means that our policies to support the private sector are having a significant impact. Economic actors in these sectors are receiving needed support,” the Finance Minister said.

He encouraged all Ghanaians to be guided by unity of purpose on SMEs to consolidate the strides made in fiscal consolidation, debt restructuring, and economic reforms.

Pledging the government’s sustained support to SMEs, he said, “You are not alone or lonely. You are a priority of the Ghanaian society and this Government. We will not fail you.”

Mr Kyle Kelhofer, Senior Country Manager, International Finance Corporation (IFC), noted that the current macroeconomic landscape in Ghana required a resilient, flexible and innovative structure.

He called for a concerted effort from all stakeholders, including financial institutions, academia, government, and the private sector, to drive sustainable economic growth through SMEs.

Professor Nana Aba Appiah Amfo, Vice-Chancellor, University of Ghana, encouraged all stakeholders to ensure that the ideas and recommendations from the discussions were translated into actions that would improve development outcomes and the wellbeing of Ghanaians.

She reiterated that SMEs remained the backbone of the Ghanaian economy, providing jobs, and contributing significantly to GDP.

She recommended that policy interventions be directed at solving the cumbersome regulatory processes, limited access to finance, complex tax systems, and high utility tariffs, which often hampered the growth of SMEs.