Petroleum Fund value now stands at Shs 246.6bln

KAMPALA, July 9, 2024 – The Petroleum Fund had Shs 246.6 billion as of June 30, 2023, compared to Shs 121.1bln as of June 30, 2022, according to the report of financial statements released by the Accountant General’s Office.

The increase in the Fund position of Shs 125.4bln is attributed to the increase in the revenue collections during the period compared to the previous financial year.

The Fund received tax and non-tax revenue totaling Shs 125.9bln as of June 2023 compared to Shs 81.9bln as reported in June 2022. The tax revenue amounted to Shs 118.6bln [94 percent] while non-tax revenue was worth Shs 7.4bln [6 percent].

“The 54 percent increase in revenue was largely due to increased corporation and withholding taxes collected during the period. This is attributed to increased oil and gas activity following the Final Investment Decision that was announced in February 2022 and the drilling of production wells that commenced in January 2023,’ says the Accountant General’s report containing the financial statements.

On the other hand, the increase in the non-tax revenue, according to the report, is mainly due to increased surface rentals and training fees paid by oil companies. “Signature bonus paid during the period relates to two companies that is, Uganda National Oil Company and DGR Energy Turaco Uganda- SMC Ltd following the signing of Production Sharing Agreements for Kasuruban and Turaco Blocks respectively,” adds the report.

According to the report, the main source of revenue for the Fund is taxes from the companies dealing exclusively in petroleum activities and non-tax revenues resulting mainly from surface rentals, training fees, and signature bonuses.

Oil production has not commenced and it is difficult to project and plan for the expected petroleum revenue but this is however expected to significantly increase on commencement of oil production in 2025 when the country expects to produce its first oil.

Petroleum Fund Bank Accounts

According to Ambrose Promise, Commissioner Accounts/Head of Accounts at the Petroleum Fund, it currently maintains three bank accounts two of which are in Bank of Uganda. The third one was opened on June 23, 2017 in the Federal Reserve Bank of New York to facilitate investment under the Petroleum Revenue Investment Reserve [PRIR]. The two accounts in Bank of Uganda [BoU] are denominated in Ugandan shillings for the local currency deposits and USD for the United States dollar-denominated transactions respectively.

During the reporting period, nil withdrawals were made out of the Petroleum Fund to the PRIR for investment, Consolidated Fund [CF] to support the annual budget and the Uganda National Oil Company [UNOC] to fund its approved investments.

However, commenting on the report the Auditor General said there had been delayed investment of petroleum revenues.

The Charter for Fiscal Responsibility provides that a maximum of 0.8 percent of the preceding year’s estimated non-oil GDP outturn be transferred to the CF for budget operations, with the remaining balance directed to the PRIR for sustainable investment. However, in FY 2022/23, no funds were allocated to either the consolidated fund or the PRIR.

The anomaly was attributed to delayed approval and the subsequent postponement of the appropriation process. Consequently, Shs 206,656,119,049 of the entire fund balance remained unallocated. The failure to appropriate funds, results in idle financial resources and undermines the economic benefits from prudent oil revenue investment.

“I advised the Accounting Officer to ensure that funds are appropriated to both the CF and PRIR, as this will enable the country derive economic benefits as envisaged,” said former Attorney General John S. Muwanga  who also looked at the Fund’s financial stand before he retired this year.

https://thecooperator.news/uganda-is-losing-so-much-by-buying-petroleum-through-middlemen-in-kenya/

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