https://www.myjoyonline.com/10-year-questionable-contract-by-finance-minister/-------https://www.myjoyonline.com/10-year-questionable-contract-by-finance-minister/

In the first of this series, The Fourth Estate’s Evans Aziamor-Mensah, Adwoa Adobea-Owusu and Manasseh Azure Awuni revealed that Strategic Mobilisation Ghana Limited (SML), which started revenue assurance services to the government of Ghana in 2020 had made a number of false claims.

The company claimed in February 2023 that it had saved Ghana over GHc3 billion in revenue that would have been lost to the state but for its services in the contract it signed with the Ministry of Finance and the Ghana Revenue Authority (GRA).

The investigation found this claim to be completely false. The Managing Director of SML, Christian Tetteh Sottie, claimed he did not know about the figure when The Fourth Estate confronted him with counter evidence. He said the media, including the state-owned Daily Graphic, had taken a presentation SML made to the GRA board out of context and reported the wrong information. He said SML had called the journalists to draw their attention to the supposed error.

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When asked why the story of saving Ghana GHc3 billion was still on the website of SML the morning of the interview with The Fourth Estate, in July 2023, he said, “I don’t of any website matter(sic).”

When asked why the story of saving Ghana GHc3 billion was still on the website of SML the morning of the interview with The Fourth Estate, in July 2023, he said, “I don’t of any website matter(sic).”

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SML admitted its false claims and deleted them from the website of SML shortly after our interview

The company had also claimed that its services had stopped “under-reporting, diversion and dilution of fuel products and general non-compliance in the petroleum industry sector.”

When The Fourth Estate confronted the company with evidence that it did not perform any of those services that tackled those problems, which were the causes of revenue leakages in the downstream petroleum sector, SML admitted its claims were false and deleted them from the website of SML that same day.

SML also admitted its ultrasound metres at the nation’s fuel depots were less accurate than the metres of the loading gantries at the depots, which are calibrated and certified by the Ghana Standards Authority every six months.

The GRA and the Ministry of Finance contracted SML to monitor the volumes of petroleum products lifted. However, the GRA told The Fourth Estate that the figures SML churned out as its monitoring of volumes were not the ones GRA uses to calculate petroleum taxes or revenue for the state. The GRA uses figures from the loading gantries, which the authority was using even before SML was contracted.

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The Managing Director of SML, Christian Sottie, denied knowledge of the GHc3 billion savings and claimed the media misreported SML. But the story is still on the website of SML.

SML also confirmed to The Fourth Estate that it had never detected any case of under-declaration since it started its monitoring services for the GRA over three years ago.

Apart from the false claims, SML does not tackle any of the problems identified as causing revenue losses in the downstream sector, a fact SML and government officials admitted when we interviewed them.

This notwithstanding, the Ministry of Finance, in June 2023, instructed the GRA to expand the scope of SML Ghana’s work.

Ministry of Finance letter sighted by The Fourth Estate said the “Honourable Minister [Ken Ofori-Atta] has determined that there is the need to monitor the production and shipment of oil and gold out of the country.

“To this end, he will like to expand the Revenue Assurance work being performed by SML to include upstream oil drilling by the production companies and the gold mining companies,” the letter dated June 22, 2023, stated.

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The Ministry of Finance letter on the expansion of SML Contracts to cover oil and gold production in Ghana

Sources close to the Ministry and SML Ghana have confirmed the contract has been signed and stakeholders in the mining industry have been contacted in writing to help SML operationalise the terms of the contract.

Last week, representatives from the GRA and SML met the Ghana Chamber of Mines to discuss the execution of the contract. The Fourth Estate’s sources familiar with discussions at the meeting said SML invited the Ghana Chamber of Mines to visit the company to inspect the setup it is putting in place to implement the new contract. The Chamber is to visit.

Per the terms of this new contract, the government will pay SML US$0.75 for any barrel of oil produced in Ghana.

Ghana currently produces between 160,000 to 170,000 barrels of oil per day. The Pecan field project is expected to add 80,000 barrels per day in a year, a Deputy Minister of Energy, Andrew Mercer, recently told Reuters.

SML’s share of US$0.75 per barrel a day means the company will make at least US$120,000 per day from the 160,000 barrels per day.

The contract also mandates the state to pay SML Ghana 0.75 per cent of the total amount of gold that is produced and monitored in Ghana. Ghana is currently the largest producer of gold in Africa, beating South Africa with 3.7 million ounces of Gold in 2022.

Using the 2022 production figures to estimate SML’s earnings, the company’s 0.75% share of 3.7 million ounces at a global price of US$1,800 per ounce (as contained in the Finance Minister’s 2024 budget statement) will amount to US$50 million from the gold sector alone.

What SML would be paid for the upstream petroleum sector and the gold mining sectors
The Contract spells out what should be paid to SML under the gold and oil upstream petroleum sectors. Together with the downstream sector, the company will be paid over $100 million a year

Together with the downstream and upstream petroleum sectors, SML Ghana will be paid more than US$100 million by the government of Ghana through the “revenue assurance” contracts.

This money is more than the amount allocated to 19 out of the 27 ministries in the 2024 budget of the Republic of Ghana by the Ministry of Finance.

The amount due SML per this contract is more than the annual revenue from many taxes, including the controversial electronic transaction tax (E-Levy).

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The contract term is 10 years which means the company would have rake-in 1 billion dollars in 2032

“A typical create loot and share”, a mining expert.

A mining expert who spoke to The Fourth Estate on condition of anonymity described the engagement of SML to monitor gold production as a “typical create, loot, and share” scheme to plunder the resources of the state.

The source said SML has no role in the mining sector and won’t perform any function that is not already in place to monitor and assure revenue for the government.

“To put it simply, what we do here is that we crash rocks in search of gold. After crashing, we take the rocks that have gold particles to what we call the Gold Room to extract the gold,” the source explained.

“In the gold room of every mining company, we have officials of the Ghana Revenue Authority to protect the government’s interest and calculate taxes on whatever we produce,” the source continued.

The source further explained that aside from the GRA officials, the Gold Room also has officials from the Precious Minerals Marketing Company (PMMC), the state institution certified to grade, assay, value and process precious minerals.

“The PMMC is the government’s assayer, so they take samples of the gold we produce to their labs in Accra to test and report of the percentage of actual gold in the bars.”

The source said the mining companies in Ghana refine their gold outside the country and reports from the gold refineries abroad are returned to Ghana for reconciliation with the PMMC report.

“For instance, if the PMMC’s test report says a bar has 97% gold and 3% silver, and the refinery report says it has 94% gold and the rest are of silver and other metals, the report is reconciled.”

The source explained that all the gold that leaves the mines is airlifted by helicopters with security protection to the Kotoka International Airport in Accra for onward export.

“Between the mines and the airport, anything could happen, so we have Customs officials in every helicopter that lifts the gold from the mines to Kotoka, where they hand over to their superiors for the paperwork and export.

“So, what is SML coming to do?” the source asked. “Are they coming to do the work of PMMC or GRA?”

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The Petroleum Commission says it is not aware of the contract with SML

The regulator of the upstream sector, the Petroleum Commission, has told The Fourth Estate that it has no knowledge of the contract with SML to monitor petroleum production in Ghana. It also said in a response to a right to information request that it has no report of leakages in the sector, a reason SML was contracted to monitor.

The Commission, according to its official website, was established by “an Act of Parliament, 2011 (Act 821) as a result of hydrocarbon discoveries in commercial quantities, to regulate and manage the utilisation of petroleum resources and, coordinate the policies in the upstream petroleum sector.”

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Executive Director for Africa Centre for Energy Policy, Benjamin Boakye

The Executive Director of the Africa Centre for Energy Policy (ACEP), Benjamin Boakye, told The Fourth Estate that, SML’s role is needless and would result in loss of revenue to Ghana without adding value to the process.

“Recently, Tullow installed new metering systems that will be calibrated by the Standards Authority. Is the Finance Ministry saying that those metres are wrong?,” he asked.

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.