Uganda: Civil Society Group Wants Clear Spending of Petroleum Fund Cash

Kampala — As government and oil companies continue to negotiate on oil deals ahead of production, civil society organisations under their umbrella group, Civil Society Budget Advocacy Group (CSBAG) have come out to advise on how oil revenues should be used.

At a meeting in Kampala held last week, the group said there should be a review of the legal framework to provide for an oversight role to Parliament and CSOs into the management of the Uganda Petroleum Fund operations.

The framework, they said, should also create an expenditure cap/ceiling on the petroleum revenues transferred into the Uganda Consolidated Fund. They said that this would help to avoid overdrawing the petroleum fund and appropriating huge sums of money that would end up in the economy and cause inflationary tendencies.

They also recommend that there should be prudent macroeconomic tendencies put at the forefront to avoid clocking the economy.

They also said, appropriation of funds and their investment should be clear to avoid misuse of the funds.

They added that the government should ensure strict adherence to the set protocols, laws and procedures meant for proper management of oil revenues.

The government should also develop and publish an annual petroleum revenue utilization plan, which should be approved by Parliament to avoid ad-hoc oil revenue expenditures by the government.

"It is possible that Parliament is weak when it comes to monitoring the fund," they said, adding "It is unfortunate that we don't trust our leaders."

Siraj Magara, a budget policy specialist at CSBAG, said that the recommendations are put out in good faith to ensure that the money is well spent to benefit all Ugandans.

Patrick Nsamaba, the Member of Parliament for Kasanda North urged CSOs to continue interrogating government on oil money expenditure as they (MPs) continue to push for fair laws in Parliament that are critical in developing the oil sector.

"This is an important issue and everyone must be involved," Nsamba said, "Once oil starts flowing, the money is going to be huge."

Diana Taremwa, a member of CSBAG said that this development is critical as the government is headed for oil production.

"We need to clean up our house as we get prepared for production... payments by oil companies should also be tracked to ensure that they are paying what is due to the government," she added.

The Fund's history

The Petroleum Fund was established in 2015 under the auspices of the Public Finance Management Act, 2015.

It is meant to be a depository and stabilization Fund for all petroleum revenues that accrue to the government.

About Shs969bn has been deposited on the account and most of this money has accrued from taxes (94%) as compared to non-tax revenues (5.8%) within the same period.

Capital gains tax have been the major tax revenue source (over 70%) while surface rental and training fees have contributed most (36%) among the NTR sources.

The fund has also experienced significant withdrawals with in the same period. The government reported that the UPF was valued at Shs288.6bn by Dec.31, 2018.

This means, the government has spent more than a third of the money out of the fund before producing any quantity of oil.

This comes as the government is struggling to narrow the budget gap while increasing infrastructure investments.

But the Auditor General's report for 2017 says that there were irregularities in the process of money transfers from the fund and its eventual appropriation.

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