Petroleum Fund falls from Shs304.6b to Shs87.7 billion  

Money held in the Petroleum Fund has dropped from Shs304.6b in June 2019 to Shs87.7b in June 2020.
According to the Bank of Uganda Annul Report for the period ended June, money held in the Petroleum Fund dropped by at least Shs216.9b in 2020. 

“The closing balance in the Petroleum Fund accounts as at June 30, 2020 was therefore $6.42m and Shs63.82b,” the report reads in part, adding that during the year, inflows were only $1.5m and Shs35.6b.
The Petroleum Fund, which was established in March 2015 by the Public Finance Management Act, is overseen by Bank of Uganda. 

The Fund operates on three accounts, a dollar and shilling account managed by Bank of Uganda, and a third account in New York, US to facilitate investment of revenue through the Petroleum Revenue Investment Reserve. 
However, the Central Bank, according to the report, says no allocation has been made to the Petroleum Revenue Investment Reserve, but instead, government has been raiding the Petroleum Fund for money to fund budget shortfalls. 
For instance, government had in the 2019/20 financial year planned to overdraw the Petroleum Fund after a decision by Parliament appropriated Shs445b to the Consolidated Fund.
At the time, (July 01, 2019), the balance in Petroleum Fund accounts stood at $74.82m and Shs28.22b, representing a combine sum of Shs304.6b.

However, only Shs255b equivalent to $69.95m of the amount appropriated was transferred to the Consolidated Fund to finance the 2019/20 budget, leaving a balance of $4.8m and Shs28.22b.  Bank of Uganda also revealed in the report that it did not receive the cash flow plan as anticipated since the amount required was withdrawn as a lump-sum.
It should, however, be noted that Minister of State for Planning David Bahati at the beginning of 2020, said there wouldn’t be any allocation from the Petroleum Fund to finance the 2020/21 budget as there was no more money left in the fund.

Government has for years been withdrawing money from the Petroleum Fund, a move which experts as well as the Auditor General have raised as a concern. 
In 2017/18, government withdrew Shs125.6b from the Fund in November while Shs200b was transferred to Consolidate Fund to finance the 2018/19 budget. 
Even then, there have been developments in the oil and gas sector, which could see the Petroleum Fund secure some funds. 
Tullow has completed the sale of its stake to Total, a move expected to generate substantial sums in taxes. 
However, it is not yet clear if there have  been any deposits since June.

Auditor general concerns 
Auditor General John Muwanga has in the past raised concerns over the absence of a Petroleum Investment Framework to guide investment of funds under the Petroleum Revenue Investment Reserve in Bank of Uganda. 

He also noted that because of the lack of disclosure of the infrastructure and development projects that would be funded from the petroleum revenues, he couldn’t verify that the funds withdrawn from the Petroleum Fund to the Consolidated Fund were used to finance infrastructure development of government as is required by the law.  

Bou expectation in oil and gas sector 
Following a steady progress in the oil and gas sector, such as signing of the host government agreement by Total and government, as well as signing the inter-governmental agreement to construct the 1, 445 km pipeline at an estimated cost of $3.5b, the Central Bank has renewed anticipations. 

Bank of Uganda says it anticipates finalisation and sign-off of the Operational Management Agreement between the Governor and Minister of Finance. 

In addition, during 2020/21, the Central Bank also anticipates the issuance of the Petroleum Revenue Investment Policy by Ministry of Finance to the Bank of Uganda.

The Central Bank also expects investment of funds held in the Petroleum Fund in line with the provisions of the Public Finance Management Act 2015, subject to any appropriation by the Government among others.