GRA-SML deal: No technical needs assessment was done prior to engaging SML but… – KPMG report

The 2023 Contract extended the scope of SML’s services to include upstream petroleum and minerals audit.

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 onthe service requirements.

Regarding the downstream petroleum audit services, KPMG determined 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.

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.

“SML had yet to implement the upstream petroleum audit and minerals audit services, and therefore, there could be no assessment as to whether GRA would derive value or benefit from that service.

No fee has been paid for the upstream petroleum audit and minerals audit services.

The total fees estimated to be paid to SML under the 2023 Contract for five years is GH¢5,173,091,857.00, which averages to about GH¢1 billion per year.”

President Nana Addo Dankwa Akufo-Addo acted on the report presented to him by KPMG on the agreement between the GRA and the SML.

The President has made a number of directives following the reports.

A statement issued by the Presidency on Wednesday, April 24 highlighted the directives saying  “The upstream petroleum audit and minerals audit services have not yet beencommenced, and no payments have been made in respect of those services; therefore,they may be terminated.

However, given that the upstream petroleum audit and minerals audit services could prevent significant revenue leakages, the President has directed that the Ministry and GRA conduct a comprehensive technical needs assessment, value-formoney assessment, and stakeholder engagements before implementing such services.

“The transaction audit and external price verification services may also be terminated.According to KPMG’s findings, GRA obtained partial value or benefit for those services.This was also due to a lack of monitoring on the part of GRA to ensure that SML performedthe services as stipulated in the contracts.