Energy Minister, CBOD CEO shoot down GRA-SML deal resumption

…Reveal inferior Petroleum Revenue Monitoring System

The Energy Minister, Matthew Opoku Prempeh and the Chief Executive of the Chamber of Bulk Oil Distributors, have shot down the resumption of work by Strategic Mobilisation Limited (SML) in the monitoring operations in Ghana’s Downstream Petroleum.

The two, raised concerns about the recommencement of work while disclosing that SML’s technology was inferior to the revenue monitoring systems that have been developed by the Ministry of Energy, Ministry of Trade and Industry, and other relevant stakeholders based on the Singaporean Standard.

The energy minister, in a letter dated Thursday, June 20, 2024, and addressed to the Commissioner-General of Ghana Revenue Authority (GRA), explained that the Singaporean Standard, had “developed new standards for measurements in the oil and gas sector which utilizes the Coriolis mass flow metering system”.

“In view of the foregoing, we wish to indicate that all persons and entities undertaking measurements for purposes of revenue assurances in the oil and gas sector are expected to do so in accordance with the new standards, the minister’s letter cautioned the GRA boss.

SML was directed by the GRA to restart its monitoring activities in the downstream petroleum sector effective June 14, 2024.

This comes after an audit by the KPMG into the controversial deal commissioned by President Nana Akufo-Addo, concluded that SML contracts, had breached many laws, including the Public Financial Management Act. The report said the multi-year contracts should go through Parliament for approval.

The latest decision, announced in a GRA statement dated June 12, 2024, was conveyed to Bulk Oil Distributors and aligns with directives from President Akufo-Addo, following the comprehensive KPMG report.

The GRA’s statement highlighted the necessity for SML to ensure that all systems are fully functional and in compliance with relevant standards and regulations.

This move aims to provide accurate, reliable, and timely monitoring services to bolster revenue assurance. The Bulk Oil Distributors are expected to cooperate to facilitate the effective resumption of these monitoring operations.

“We inform you that Strategic Mobilisation Limited (SML) is directed to resume its monitoring operations in the Downstream Petroleum sector effective June 14, 2024, as per the Presidential Directives on the KPMG report. SML must ensure all systems are fully operational and comply with relevant standards and regulations to provide accurate, reliable, and timely monitoring services to support our revenue assurance.

 The Bulk Oil Distributors must cooperate to ensure a successful resumption of the monitoring exercise,” read parts of the statement.

Interestingly, the Ministry of Energy, in a June 20 statement, announced the development of new measurement standards for the oil and gas sector in collaboration with the Ghana Standards Authority (GSA), the Ministry of Trade and Industry, and other relevant stakeholders.

These new standards are based on the Singaporean Standard and utilize the Coriolis mass flow metering system.

“The GSA, in collaboration with the Ministry of Energy, the Ministry of Trade and Industry, and other stakeholders, has developed new standards for measurements in the oil and gas sector, based on the Singaporean Standard, utilizing the Coriolis mass flow metering system. The Minister for Trade and Industry, under Section 13 of the Ghana Standards Authority Act, 2022, Act 1078, has declared these standards operational and mandatory. All entities undertaking measurements for revenue assurance in the oil and gas sector must adhere to the new standards,” the Ministry noted.

“Subsequently, the Minister for Trade and Industry pursuant to Section 13 of the Ghana Standards Authority Act, 2022, Act 1078, has declared the standards operational and mandatory.

“In view of the foregoing, we wish to indicate that all persons and entities undertaking measurements for purposes of revenue assurances in the oil and gas sector are expected to do so in accordance with the new standards.

“We count on your co-operation in this regard”, Dr Opoku Prempeh’s letter concluded.

The directive for SML’s operational resumption and the introduction of new measurement standards follow President Akufo-Addo’s commissioning of KPMG on January 2 to audit the contract between the GRA and SML.

The KPMG, report revealed significant financial details, noting that SML received a total of GH¢1,061,054,778.00 from 2018 to the present.

This includes GH¢454,860,396.27 for transaction audit and external price verification payments and GH¢945,342,007.29 for downstream petroleum measurement payments.

The report provides an in-depth analysis of the partnership, aimed at enhancing revenue collection in Ghana through advanced technological solutions, reducing leakages, and increasing overall efficiency in the GRA’s operations.

The CBOD CEO, Dr Patrick Ofori, on his part, explained that there are existing mechanisms that ensure that the government’s revenue from the downstream petroleum sector is monitored and mobilised effectively. 

This comes after the GRA gave SML, the green light to resume its monitoring operations of the Downstream Petroleum sector effective June 14, 2024.

In a statement to SML, the revenue authority noted that the directive is in accordance with President Akufo-Addo’s directives on the KPMG report.

“We wish to inform you that Strategic Mobilisation Limited (SML) has been directed to resume its monitoring operations of the Downstream Petroleum sector with effect from 14th June 2024 in accordance with the Presidential Directives on the KPMG report.

“SML is expected to ensure that all systems are fully operational and compliant with the relevant standards and regulations to deliver accurate, reliable and timely monitoring services to support our revenue assurance.

“The Bulk Oil Distributors are to cooperate to ensure a successful resumption of the monitoring exercise.”

However, in an interview on Eyewitness News, Dr. Ofori noted that there are more than four mechanisms in the downstream sector that are being put in place to ensure the government is not shortchanged.

“When we talk about standardisation, and a system seeks to protect revenue assurance, I don’t think the mission of the NPA and that of the standard authorities would want to approve certain systems that shortchange government revenue generation; the Ghana Revenue Authority, with their mandate, would do that.

“Collectively, at the state level, they could have come together with one system that does not necessitate conflicts. Because, currently, we have more than four mechanisms that are being put in place to ensure the government is not shortchanged.

“The majority of it within the downstream is spearheaded by the National Petroleum Authority. We have the ERDMS, and the GRA has its own mechanism that we refer to as the ICUMS, which is the second one. We also have tracking systems that seek to ensure that there is classification and categorisation of the fuel so that the one that has any tax components knows the volume and the masses that have been transported.

“In addition to that, we also have the petroleum seal, which seeks to ensure that products that are being moved from the terminal through the BRVs are also protected and taken to the various filling stations to ensure that the government’s revenue is protected.

“If all these mechanisms do not assure the government of the required revenue that is expected of them, then there must be something going amiss, and that is where we need to interrogate further,” he stated.

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