Civil society query proposal to give UNOC unlimited access to oil funds
Many local service providers are preparing to cash in from the more than $20b expected to be generated by the oil sector once it reaches production stage. FILE PHOTO
What you need to know:
- The plan, it is allege, is contained in amendments in which government is seeking to amend the Financial Management Act to allow UNOC retain a portion of oil revenue, from which the unused balance will be remitted to the Petroleum Fund.
A section of civil society organisations has questioned a move in which government is seeking to allow Uganda National Oil Company (UNOC) to have unlimited access to revenues generated from oil activities.
The plan, it is allege, is contained in amendments in which government is seeking to amend the Financial Management Act to allow UNOC retain a portion of oil revenue, from which the unused balance will be remitted to the Petroleum Fund.
The proposed amendments, which have already been tabled before Parliament, it is alleged, seek to review and revise the definition of petroleum revenue and allow UNOC to retain and spend oil revenue at source as well as introduce a section that would allow UNOC to deposit the balance of oil proceeds into the Petroleum Fund.
In its explanation to Parliament, the Ministry of Finance said the need to amend the law, stems from the desire to empower UNOC in the management of oil revenue as well as enabling it to meet its financial obligation.
The current law only provides that petroleum revenues are deposited into the Petroleum Fund, which according to Ministry of Finance, creates a financing challenge for obligations under UNOC.
However, Mr Julius Mukunda, the Civil Society Budget Advocacy Group executive director, said under the law all government ministries, departments and agencies that collect revenue, are required to declare it through the Consolidated Fund thus the proposed amendments offer UNOC exceptional powers that are outside the law.
“Parastatals collect and remit resources to the Consolidated Fund. This allows government to ascertain its revenue [cash] position and as such rationalise its expenditure,” he said, noting that where as a Certificate of Financial Implication has been presented to support the amendments, there is no information on its impact to the economy as required by the law.
Therefore, he said, there is need for Parliament to follow up on this requirement, under which estimates of revenue and expenditure for a period of not less than two years after the amendments have been passed, are provided.
However, Mr Peter Muliisa, the UNOC legal and corporate affairs manager, said it was not true that they are seeking to manage all money generated from oil, noting that oil cash is generated from royalties, profits and taxes, which constitute 93 percent of government’s entitlements and by law must go to the Petroleum fund.
“The 7 percent consists of entitlements from state participation in projects, which in our case is the 15 percent entitlements in Tilenga and the Kingfisher projects. So, what we are asking is that from the 15 percent we receive, we first pay our operational costs and the rest we send to the Petroleum Fund,” he said.
