Vice President of IMANI Africa, Bright Simons, has made a striking assertion regarding the revenue assurance contract between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Ghana Ltd (SML).

He contends that this contract represents an evolved version of the failed Agyapa Royalties deal.

According to Simons, following the Nana Addo Dankwa Akufo-Addo government's inability to execute the Agyapa deal, which aimed to leverage Ghana's mineral resources as collateral, they broadened the scope of the SML agreement. Initially focused on revenue assurance for oil production, the contract was expanded to encompass minerals as well, as reported by myjoyonline.com.

During a comprehensive presentation on the responsibilities of SML on Joy FM's Newsfile program on April 27, 2024, Simons highlighted that despite the questionable nature of the contract, the government tasked the company with extending its services to cover Ghana's mineral production.

“We are completely certain that when you try to expand this SML service to cover the minerals and petroleum it was simply Agyapa [deal] in suit and tie.

“When Agyapa failed, somebody suggested that if we cannot get the percentage of the royalties that we wanted from every ounce of gold sold in Ghana, then we will do even more, we will add the oil as well and we will create a mechanism to get a certain percentage out of that,” he is quoted to have said.

Simons pointed out several irregularities in the SML deal, notably the challenges in accurately determining oil production and calculating royalties. These concerns are compounded by doubts regarding the reliability of data provided by oil companies.

He criticized the Ghana Revenue Authority (GRA) for depending on mechanisms that struggle to establish royalty payments, emphasizing the inherent difficulties in monitoring and regulating petroleum extraction and sales.

"It doesn’t make any sense to try and claim that because the Tullow and other companies are lying about the oil produced, you will use some mechanism to try and establish that.

"And for every barrel of oil produced, you will then be entitled to a percentage. What logic is that?” he quizzed.

Background:

President Akufo-Addo,in a press statement issued by the Presidency's Communications Director, Eugene Arhin, directed the Ghana Revenue Authority (GRA) and the Ministry of Finance to engage in renegotiating the SML contract. He stressed the importance of closely monitoring and periodically evaluating the renegotiation process to ensure it aligns with expectations.

"There is a clear need for the downstream petroleum audit services provided by SML. 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.

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 wrote.

The decision to renegotiate the contract follows the president's acceptance of the recommendation by KPMG after its audit of the deal.

The audit findings prompted the need for a review of the revenue assurance contract, highlighting areas where improvements are necessary to enhance its effectiveness.

On January 2, 2024, President Nana Akufo-Addo commissioned KPMG to investigate the contract between SML and GRA, prompted by an exposé by media outfit, the Fourth Estate.

President Nana Addo Dankwa Akufo-Addo has since received the KPMG audit report regarding the revenue mobilisation contract between GRA and SML.

The report was delivered to him on Wednesday, March 27, as announced in a Facebook post by Eugene Arhin, the Director of Communications at the Presidency, on Wednesday, April 3.