SML deal was simply an upgrade of the Agyapa Royalties deal – Bright Simons

A vice president of IMANI Africa, Bright Simons, has asserted that the revenue assurance contract between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Ghana Ltd (SML) was an upgrade of the botched Agyapa Royalties deal.

According to Simons, after the Nana Addo Dankwa Akufo-Addo government failed to implement the Agyapa deal, which sought to collateralise Ghana’s mineral resources, it expanded the SML deal which was originally for revenue assurance for oil production to include minerals, myjoyonline.com reports.

The IMANI vice president, who is reported to have made these claims during a detailed presentation on the job expectation of SML on Joy FM’s Newsfile programme on April 27, 2024, said that the company was tasked by the government to expand its service to Ghana’s mineral production even though the contract was questionable.

“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 said that the SML deal had a lot of irregularities including the feasibility of accurately determining oil production and calculating royalties, particularly, in light of concerns about the reliability of data provided by oil companies.

He slammed the GRA for relying on mechanisms to establish royalty payments, highlighting the inherent challenges associated with monitoring and regulating the extraction and sale of petroleum.

"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 released by the Communications Director of the Presidency, Eugene Arhin, instructed the GRA and the Ministry of Finance to renegotiate the SML contract.

The president emphasized that the renegotiation should be closely monitored and evaluated periodically to ensure it meets 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.

About the Agyapa Royalties deal:

In 2020, the government of Ghana proposed a deal which was meant to raise money by floating shares in a company called Agyapa Royalties Limited on the London Stock Exchange.

This deal was met with wide criticism from civil society groups and the opposition, who claimed that it was a secretive and corrupt deal that would allow politicians to enrich themselves at the expense of the country.

Later that year, journalist Kweku Baako said that Gabby Asare Otchere-Darko’s firm had been transaction advisors to the government in the failed deal.

Gabby clarified that a UK-based law firm was the principal advisor on the deal and Africa Legal Associates worked for the firm.

One major issue that has emanated from the brouhaha surrounding the deal is the role of Osafo-Maafo’s son and Gabby Otchere-Darko.

BAI/NOQ

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