June 13, 2024
P.O.Box 613ER Gombilla House, Lamashegu Market, Tamale, Northern Region

Minerals Commission distances itself from questionable SML contract

The Minerals Commission says it “did not play any role in the award of the contract” to Strategic Mobilisation Ghana Limited (SML), an offshoot of a timber company, to undertake revenue assurance services in the gold production sector for the government.

The Chief Executive Officer of the Minerals Commission, Martin Kwaku Ayisi, said this in response to a right to information (RTI) request from Manasseh Azure Awuni, an investigative journalist and former Editor-in-Chief of The Fourth Estate who led the SML investigation.

Mr. Ayisi’s response, which has been sighted by myjoyonline.com, also said the Minerals Commission does not have any report of losses resulting from the deliberate or accidental calculation as far as revenue in the mining sector is concerned.

The SML contract, which was awarded to the company by the Ministry of Finance and the Ghana Revenue Authority (GRA), entitles the company to more than $100 million every single year for the duration of the contract.

According to the GRA, the contract is for five years, and renewable for another 5 years.

President Nana Addo Dankwa Akufo-Addo suspended the contract two weeks ago and appointed an international audit and accounting firm, KPMG, to audit the contract and submit a report in two weeks. 

This was after parliament had passed a resolution to investigate the contract.

The President’s directive followed an investigation by The Fourth Estate, which revealed that SML had made false claims about an earlier contract it had been awarded by the Finance Ministry and GRA to undertake revenue assurance in the downstream petroleum sector. 

The company is paid up to GHS24 million a month for that initial contract.

SML had claimed that its operations saved Ghana more than GHS3 billion. When The Fourth Estate confronted the management of the company with revenue figures from the sector, which was less than the amount SML claimed to have saved within the same period, SML denied ever claiming saving that amount.

The Managing Director of SML, Christian Tetteh Sottie, said that the media made a mistake in its reportage of the figure.

When it was pointed out to him that the same claim was on the website of SML even as the interview was taking place, he said he did not “know about any website matter.”

When the investigation was published, the GRA issued a statement and insisted that SML’s claim of saving Ghana GHS3 billion was true, even though the GRA failed to indicate how that money would have been lost but for SML’s intervention. 

Despite the admission by GRA officials in the investigative documentary that the authority does not use the figures from SML’s measurement to calculate taxe and revenue, GRA claimed SML’s operation had resulted in a significant increase in volumes.

The Africa Centre for Energy Policy and IMANI Africa, however, countered the GRA’s claim of significant revenue increment, saying the claim is false.

The two civil society organisations said GRA’s data available on the Ministry of Finance’s website for statutory reporting under the Energy Sector Recovery Act (ESLA) and another statutory data on the website of the National Petroleum Authority (NPA)website did not support the GRA’s claim.

“In the year SML commenced operations (2019/2020), GRA’s data indicates a 5% growth in refined petroleum product consumption relative to the previous year (19.38 million litres). In the same period, the NPA reports a 7% growth (24.71 million litres) in product consumption. In the subsequent year (2020/2021), both GRA and NPA data align, indicating an 11% and 10% growth in product consumption, respectively,” the statement by the CSOs indicated.

They added: “The actual growth between 2018/2019 and 2020/2021 was about 62.95 million from NPA data and 60.15 million from the GRA Data. In the 2021/2022 year, the total consumption of refined products in the country declined by 5% and 7% according to NPA and GRA respectively.”

SML had also stated on its website that its operations had stopped “under-reporting, diversion and dilution of fuel products and general non-compliance in the petroleum industry sector.”

When The Fourth Estate team pointed to the company that the services that stopped those anomalies were performed by some other companies contracted by the NPA, the management of SML admitted the claim was false and deleted it from the company’s website that same day.

These anomalies notwithstanding, the Ministry of Finance, in June 2023, instructed the GRA to expand the scope of SML Ghana’s work.

Ministry of Finance letter said the “Honourable Minister [Ken Ofori-Atta] has determined that there is the need to monitor the production and shipment of oil and gold out of the country.

“To this end, he will like to expand the Revenue Assurance work being performed by SML to include upstream oil drilling by the production companies and the gold mining companies,” the letter, dated June 22, 2023, said.

Some members of parliament, civil society groups and anti-corruption campaigners have questioned the basis for the award of the contracts to SML. Like the downstream sector, the upstream and gold mining sectors already had systems in place to protect government’s interest.

The Minerals Commission, which was set up by an Act of Parliament as “the Government agency with the primary responsibility of developing and coordinating mineral sector policies and monitoring their implementation” says it was not involved in the contract with SML to monitor gold production in the country.

The Minerals Commission said it was not involved in the award of the contract and does not have reports of revenue losses in the gold mining sector.

“The Commission does undertake regular or special audits from time to time as per its mandate to deal with such issues and we do collaborate with other Government or public institutions to do that,” the CEO added in the RTI response.

The response from the Minerals Commission comes in the wake of a similar response from the Petroleum Commission, the regulator of the upstream petroleum sector in Ghana.

The Petroleum Commission said in a response to an earlier RTI request that it did not know about the contract awarded to SML to monitor the production of oil in the upstream petroleum sector.

Like the Minerals Commission, the Petroleum Commission also indicated that it did not have any information or report on any losses in the sector, the reason SML was contracted to monitor.

The Ministry of Finance, which declined to give a copy of the contract to Manasseh, said in a response to the RTI request that it did not have reports on revenue losses from agencies in the sectors SML was contracted to monitor.

“We do not have direct information on purported reports from agencies in the petroleum and mining sectors about losses in the downstream, upstream and mining sectors,” the ministry said.

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