Uganda’s petroleum fund not growing

Kampala, Uganda | THE INDEPENDENT | Parliament has tasked the government to put in place a Petroleum Investment framework to guide the investment of funds from the Petroleum Revenue Investment Reserve.

The decision followed a report indicating that the Petroleum Fund was not growing because funds therein were used to finance the national budget contrary to provisions of the Public Finance Management Act. It was also reported that the government had not put in place a Petroleum Investment Framework as envisaged in the law.

“As of the end of December 2018, the value of the Fund stood at 288.7 billion Shillings. The reduction in the Fund value from 470.4 billion Shilling reported in June 2018 to the current 288.7 billion Shillings was due to the transfer of 200 billion Shillings to the Uganda Consolidated Fund to finance the financial year 2018/2019 budget,” a report by the Budget Committee of Parliament stated.

The Public Finance Management Act 2015 provides that for the avoidance of doubt, petroleum revenue shall be used for the financing of infrastructure and development projects of government and not the recurrent expenditure of the government.

The committee cautioned the government to contain its appetite for the oil funds before production kicks off citing depletion of resources in the Petroleum Fund with no clear indication on what the money is spent on.

Butambala County MP Muhammad Muwanga Kivumbi also expressed worry about the management of the Petroleum Fund.

The summary of Petroleum Fund Inflows and Outflows indicates that the opening balance of the Petroleum Fund was 30.92 billion Shillings on July 1, 2017. During the Financial year 2017-2018, there was an inflow of 121.84 billion Shillings and an outflow of 30.92 billion Shillings transferred to the Uganda Consolidated Fund account.

This implied that the closing balance at the end of the financial year was 121.84 billion Shillings.   In the current financial year 2018/2019, there was an inflow of 37.51 billion Shillings in the Fund bringing the total balance in the fund at 158.84 billion Shillings.

However, this was further reduced with an outflow of 148.32 billion Shillings transferred to the Uganda Consolidated Fund account.

Committee Chairman Amos Lugoloobi also warned Uganda Revenue Authority against holding Petroleum funds or remitting the funds directly to the Consolidated Fund.

He said that Petroleum funds collected by URA, Petroleum Authority of Uganda (PAU) and any other government agency should be submitted to the Petroleum Fund without undue delay.   He faulted Uganda Revenue Authority (URA) for holding onto 2.5 billion Shillings due to the Petroleum Fund as a receivable as at December 31, 2018.

Auditor General, John Muwanga, in his audit report submitted to Parliament in January, noted that there was no explicit mention of the Fund as the source of funds but rather was disguised as Medium-Term Expenditure Framework for the financial years 2015/2016 to 2021/2022 submitted to Parliament.

Last month, Accountant General, Lawrence Semakula was quoted in the media defending the continuous raid on the Petroleum Fund to finance the National Budget saying that it does not make sense to keep money in the Fund lying idle yet they have a deficit.

Semakula reportedly said that when Uganda eventually starts commercial oil production, the current withdrawals will be offset and the Fund better managed.

*****

URN