If you have been following the news lately, conversations about the SML deal keeps popping up, with the latest being a call by the Importers and Exporters Association of Ghana on President John Dramani Mahama to swiftly terminate all existing contracts under the SML, as Ghana keeps losing over $1.4 million monthly from the state coffers.
If you have not heard about this or do not know about the existence of the contract and how it came into being, this GhanaWeb article will tell you more about it and its true state.
What is the SML Contract?
The Strategic Mobilisation Ghana Limited (SML) was engaged by the Ghana Revenue Authority (GRA) to provide real-time monitoring and audit services aimed at enhancing tax compliance and revenue assurance in the downstream petroleum sector.
In 2023, the scope of the contract was significantly expanded to include upstream petroleum activities and the mining sector, triggering heightened public scrutiny.
The origin and scope of the contract
SML began its operations in 2018, subcontracted through West Blue Consulting, to monitor fuel movements and audit transactions in Ghana’s downstream petroleum industry.
The agreement was broadened to include the upstream petroleum (oil extraction and production) and mining and mineral exports.
The contract was signed for five years to be operated on a performance-based model, where SML is paid based on the revenue it helps the government recover.
This meant that SML funded its operations upfront with the promise of returns only when measurable revenue was realised.
How it all started – Audit findings by KPMG
Issues surrounding the controversial deal started gaining traction when former President Nana Akufo-Addo, in January 2024, ordered for the suspension of the SML contract and commissioned KPMG to conduct an independent audit.
This was amid a mounting public scrutiny, with the resulting report uncovering a mix of operational gains and significant procedural lapses.
SML’s losses and irregularities
SML made some major loses within the petroleum sector, particularly the upstream and downstream sectors.
In the downstream petroleum sector, SML’s system reportedly detected an additional 1.7 billion litres in petroleum volumes, generating an estimated GH¢2.45 billion in additional tax revenue.
The upstream petroleum and mining components, however, had not yet been implemented at the time of the audit, so no performance data is available for these sectors.
However, the audit revealed critical procedural failings, notably no technical needs assessment was undertaken to justify the expansion of SML’s mandate into the upstream petroleum and minerals sectors.
The contract was awarded through single-source procurement, a method that bypassed competitive tendering without sufficient justification or the necessary approval from the Public Procurement Authority.
Perhaps, most significantly, the agreement did not receive parliamentary approval, in direct contravention of the Public Financial Management Act, 2016 (Act 921), which mandates legislative oversight for contracts with substantial fiscal implications.
Financial overview of the contract
An amount of GH¢1.06 billion had already been paid to SML by the time the contract was suspended.
If allowed to proceed, the total cost to the state was projected to reach GH¢5.17 billion over five years.
In the wake of all these happenings, Civil Society Organisations mounted strong response to the findings with a coalition of five Non-Governmental Organisations filing a lawsuit against the previous government, seeking to recover GH¢1 billion already paid to SML.
Government’s intervention and way forward
The government under former President Akufo-Addo eventually suspended the contract in 2024, pending further reviews.
In response to the audit, the government had accepted several key recommendations from KPMG aimed at strengthening oversight and accountability.
These include:
– Replacing the existing performance-based payment model with a more transparent and predictable fixed-fee structure;
– Conducting a comprehensive technical needs assessment before initiating or expanding similar contracts in the future;
– Ensuring full compliance with Ghana’s procurement laws and securing parliamentary approval for all major public financial commitments, as required by law.
What does this mean for Ghana?
As the government reviews its next steps, several critical questions remain unanswered:
1. Will the contract be renegotiated or cancelled altogether?
2. Will the courts order a refund of the over GH¢1 billion already disbursed to SML?
3. What safeguards will be introduced to ensure future Public-Private Partnerships are structured with greater transparency, legal compliance, and public oversight?
For now, the SML-GRA contract stands as a cautionary tale of an example of how efforts to strengthen revenue assurance can be undermined by weak procurement practices, inadequate oversight, and a lack of institutional transparency.
SP/AE
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