The new and consolidated contract, which is for a term of five (5) years and not ten (10) years (as alleged by the publication), was agreed upon based on the performance of SML in monitoring the downstream petroleum sector and the provision of instant reconciliation of real-time data in the sector.
PERFORMANCE OF DOWNSTREAM PETROLEUM ASSURANCE CONTRACT
1. Prior to the engagement of SML, GRA operated a manual system for the measurement of fuel in depots. The use of dipsticks for measurement was archaic and posed a risk to officers who climbed a ladder to measure the fuel in the tankers. It was inefficient and prone to revenue leakages.
Currently, oil deposited by the bulk-oil distribution companies in the depots is measured by SML with the aid of sensors installed on the depots (red flow metres). During offloading from the depots, SML again measures all the various liftings of the oil marketing companies (OMCs).
December 20, 2023
All these pieces of information are captured and reconciled with data from the ICUMS. This is done with the GRA petroleum unit. If there are discrepancies, Customs informs the OMC to enter a post-entry to correct the differences.
SML in the petroleum sector provides additional data independent of the Customs ICUMS data capable of validating anomalies in quantities imported, discharged and accounted for by way of taxes.
The revenue assurance exercise undertaken by EY Ghana and later by the Revenue Assurance and Compliance Enforcement (RACE) of the Ministry of Finance confirmed systemic deficiencies in the accounting and collection of petroleum taxes between 2015 and 2020. The mode of transmission of data from various sources and systems was fraught with inconsistencies, resulting in loss of revenue.
Extensive reconciliation had to be done on the various platforms and institutions within the petroleum downstream value chain to collect revenue that would have otherwise been lost.
The work of SML over the period has led to a significant increase in the figures reported
in the downstream petroleum sector, from an average of 350 million liters per month in 2018 and 2019 to 450 million liters per month from 2020 to 2021.
This represents over a thirty-three percent (33%) increase in volume reporting and an average of an extra 100 million liters per month at a levy rate of GHS1.44p. The extra revenue variance gained for the two (2) years will exceed GHS3 billion. This performance is attributable mainly to the introduction of ICUMS and SML systems.
THE CONSOLIDATED CONTRACT
Based on the performance of Strategic Mobilization Ghana (SML) Limited, the Ministry of Finance directed that the existing contract with SML be expanded to cover the petroleum upstream and mining sectors to minimize the risk of revenue leakages.