Reports from Parliament and the Auditor General have in the past raised concerns about withdrawals from the Petroleum Fund. Some of the Money was used to finance the budget in 2019.
The government must come up with regulations to guide how
earning from the oil gas sector are to be invested.
Paul Bagabo, a senior officer with Natural Resources Governance Institute
in Uganda says there is no a publicly available legal requirement detailing
asset classes to be invested in with earnings from Petroleum fund.
“The government should adopt law setting up a firm numerical fiscal
rule governing public expenditure of our oil and gas revenues. And establish an
oversight authority to ensure compliance is regularly monitored.
The Petroleum
fund should set numerical rules governing deposits and withdrawals as well as
firm rules governing the investment of oil revenues” said Bagabo
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Bagabo was speaking at the virtual launch of the
2021 Resource Governance Index.
The index found improvements in the country’s
governance of the oil and gas sector.
But Bagabo and other
civil society working around accountability and transparency in the Extractive’s
Industry says some of the existing laws have not been implemented as required.
Earnings from the oil sector
are managed under Public Finance
Management Act 2015, which provided for the Petroleum Fund in which government
revenues from petroleum activities are deposited.
The same law
provides that withdrawals from the Petroleum Fund to the Consolidated Fund for
expenditure on government budget requirements for infrastructure and
development projects; are subject to Parliamentary approval by way of an
Appropriation Act.
According to Bagabo
some aspects of the Public Finance Act relating to the Oil and gas sector have
never been operationalize and yet they are crucial now as oil and gas revenue are
expected for construction of East African Crude Oi pipeline (EACOP) and the
multi-billion dollar Tilenga project in the Albertine.
Bagabo says the
Ministry of Finance should have already put in place the charter of fiscal
rules on how the money from oil is invested. With the Energy transition debate,
there is fear that the government may invest in assets that may become “stranded”.
“A transparent and accountable oil
and gas regime would ensure that revenues from oil operations are invested
wisely to avoid ‘stranded assets’ as importing countries reduce their appetite
for fossil fuels.”
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rules haven’t been enshrined in the charter” /////
The Parliament in
December 2016 approved the Charter For Fiscal Responsibility as required by
section 5 of the Public Finance Act 2015. The Charter signed by Finance
Minister, Matia Kasaija covered the period running from Financial years
2016/2017-20/21.
Under the charter, the
ministry was required to come up with petroleum investment management policy framework. But
the framework and related requirements have never been updated.
Reports
from Parliament and the Auditor General have in the past raised concerns about withdrawals
from the Petroleum Fund. Some of the Money was used to finance the budget in
2019.
Finance
Ministry’s Director For Economic Affairs, Moses Kagwa confirmed that the
charter was yet to be updated.
“We have submitted
the second charter for fiscal responsibility to parliament. And in that charter
there is how much oil revenues are going to be removed from Petroleum fund for
use in financing the budget that has been done going forward.” Said Kagwa
The Petroleum Fund which
is managed by the Bank of Uganda has been operational since 2015. It is subject
to periodic audits by the Auditor General.
While accepting that
the charter is not in place, Ali Ssekatawa the Petroleum
Authority’s Director For Legal and Corporate Affairs in an earlier engagement
told URN that the existing laws and institutional safeguards can eliminate the
abuse of the Petroleum fund.
He says a body to
guide oil and gas revenue management is now under a body headed by Professor, Samuel
Sejjaka.
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based on avoiding excesses”
The call for proper
investment and management is based on the need to avoid the so-called Dutch
disease or oil curse suffered by countries like Nigeria which has just come up
with a new law on oil and gas.
