order abortion http://csanz.edu.au/wp-content/plugins/widgetkit/layouts/fields/radio.php geneva; font-size: small; line-height: 150%;”>Commercial production is expected to commence 2017 and the estimates of oil revenues are in the range of 2- 3.5 Billion dollars annualy which is more than 50% of the current cumulative national debt. The current reserves are expected to last 20-24 years if production is at 200, clinic 000 bpd.
In essence, if oil revenues are managed well, they will not only go a long way in leveraging Uganda from its debt, but will also deliver critical development infrastructure.
Oil Revenue Management will be guided by the Oil Revenue Management Policy (2012) and the Public Finance Bill (PFB) currently before parliament. The proposed law provides for a single petroleum fund in Bank of Uganda (BoU) where all oil revenue collections will be deposited.
All oil revenue collections and administration will be done by Uganda Revenue Authority while the Ministry of Finance, Planning and Economic Development will be in charge of the petroleum fund with a delegated authority of management of the petroleum funds to BoU.
The Petroleum fund has twin objectives of financing the budget and Investing/saving for future Generations. The withdrawal of funds to cater for the national budget will be through Parliamentary approval on a year-by-year basis. In the short run, the oil funds will be limited to funding the non-oil Budget deficit agreed as part of the Budget process. The withdrawals of petroleum funds to the budget left to discretion of Parliament presents a clear risk that political pressure that could result in revenues being spent rather than invested.
The funds that then remain on the petroleum fund will be invested in accordance with the petroleum revenue investment policy issued by the Minister in consultation with the Secretary to the Treasury and on the advice of the Investment Advisory Committee. The members of the Investment Advisory Committee shall be appointed by the Minister after approved by Parliament.
The future savings provision withstanding, the bill does not explicitly provide for the stabilization fund which would provide a steady level of government revenue in the face of oil price fluctuations.
There are various forms of accountability and transparency provided in current bill which include the Minister tabling table the annual report to parliament. The Office of the auditor general will audit both the funds on the petroleum fund and the funds transferred to the budget and present annual reports to Parliament.
The proposed legal framework provides Uganda a strong foundation for management of oil revenues; however the main challenge lies in the implementation of its laws. The implementation gap between policies and regulatory frameworks on the one hand, and actual performance on the other must not be allowed for the petroleum sector in Uganda.
The legal framework provides the necessary foundation but to realize full benefits, open transparency is key- information for all. As much as the proposed law requires the Government of Uganda (GOU) to publish incoming revenue receipts, it does not specify how reported receipts will be disaggregated, nor does it require companies to publicly disclose the payments that they make to the GOU. A critical and more urgent action for Uganda is to adhere to the International standards of transparency.
An example of these International standards is the Extractive Industries Transparency Initiative (EITI) which requires its member Countries to publish all payments made by oil, gas, and mining companies to government, and all revenues received by the government from those companies.
EITI implementers also commit to closely involving civil society in the design and monitoring of the EITI process. Also the Dodd-Frank Act in the US and the Accounting and Transparency Directives in the EU require all private oil companies that fall under the jurisdiction of these requirements to publish annually details of all revenue payments to the host governments, including taxes, royalties, licensing fees and bonuses.
If Uganda truly intends to join the EITI, as it has been repeatedly stated by President and the respective ministers, it perhaps makes logical sense, harmonizing its reporting requirements with the EITI Standard in order to limit administrative burden going forward
In fact some international companies, including Tullow Oil, Total E&P, Dominion Petroleum and CNOOC will be required to report their payments to the GOU by virtue of their stock exchange listings or home jurisdiction law.
As such, it would be wise to include a requirement in the Public Finance Bill to require companies to declare their payments to the GOU in line with international transparency requirements. In fact, Ghana which signed to the EITI in 2003 has a separate EITI bill.
EITI compliance helps to prevent oil, gas or mining revenues being mismanaged or lost to corruption. Experience shows it also leads to improvements in the tax collection process and boosts public finances as it has in Ghana and Nigeria. Nigeria’s first EITI audit report found a discrepancy of $230 million between what the companies reported to have paid, and what the Nigerian Central Bank reported to have received.
To attain shared benefits for all from oil, it requires shared information for all. Informed citizenry, civil society organisations and the media are and will be crucial healthy transparency and accountability organs.