GHS 5.1bn in fees to be paid to SML under revenue assurance contract – KPMG report
Findings from KPMG’s audit report on the revenue assurance contract between SML and the GRA indicate that the total fees estimated to be paid to Strategic Mobilization Ghana Ltd (SML) under the 2023 Contract for five years is GH¢5,173,091,857 which averages to about GH¢1 billion per year.
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, an addition to the downstream petroleum audit services being already undertaken by SML.
Under the downstream petroleum audit services contract with the GRA, KPMG notes that total fees paid under the contracts from 2018 to the date of suspension amount to GH¢1,061,054,778.
According to KPMG, the pricing model used in the contracts between SML and GRA was based on a variable fee structure, noting that such transaction monitoring services are usually priced using a fixed fee pricing model.
Regarding the downstream petroleum audit services, KPMG found out that there was an incremental volume of 1.7 billion litres and an incremental tax revenue of GHS 2.45 billion for the period under review.
There were also qualitative benefits, including a 24/7 electronic real-time monitoring of the outflow and partial monitoring of inflows of petroleum products at depots where SML had installed flowmeters. This, KPMG noted, serves as a deterrent for under-declarations.
Other qualitative benefits include six levels of reconciliation done by SML to prevent revenue losses to GRA and the sharing of discrepancy reports with GRA to follow up.
Regarding the upstream petroleum audit and minerals audit services contract signed in 2023, KPMG however, noted that SML had yet to implement the contract and therefore, there could be no assessment as to whether GRA would derive value or benefit from that service.
KPMG, however, noted that those are areas that could have significant revenue leakages and, thus, suggested, among other things, that a comprehensive needs assessment be conducted to establish a need for those services.
President Akufo-Addo on January 2, 2024, appointed audit and accounting firm, KPMG, to audit the contract and submit a report in two weeks.
But upon the firm’s request, the President granted the extension to ensure a more comprehensive report.
The final report was submitted by KPMG to the President on Wednesday, March 27, 2024.
