NGOs Appeal to Government on Planned Withdrawal of Oil Funds

By Fred Kiva

Civil society organizations; Transparency International Uganda (TIU) and Anti-Corruption Coalition Uganda (ACCU) are calling on government to halt the planned withdrawal of funds from the Petroleum Fund, unless the necessary legal framework is followed.

Government plans to withdraw Sh445billion from the Petroleum Fund to the consolidated fund to support this financial year budget activities. This is not the first time government is withdrawing money from the Petroleum Fund. Last financial year, government withdrew Sh200billion to fund the 2018/19 budget activities.

However in a joint press statement on Monday ACCU Executive Director Cissy Kagaba and Peter Wandera of Transparency International Uganda (TIU) argued that the planned withdrawal contravenes provisions in the Public Finance Management Act (PFMA 2015), and would set a bad precedent in regard to government’s commitment to better management of oil revenues.

“Section 58 of the PFMA 2015 states that “Withdrawing from the Petroleum Fund shall only be made under authority granted by an Appropriation Act and a warrant of the Auditor General” While section 59(1) states that “The money withdrawn from the Petroleum Fund to the Consolidated Fund to support the annual budget shall not exceed the amount authorized by Parliament in the Appropriation Act,” a joint statement signed by Kagaba and Wandera states.

“Therefore TI-U and ACCU are calling on the government to halt all the plans for the withdrawal of Sh450billion from the Petroleum Fund until the Investment Advisory Committee is fully functional as per the PFMA 2015,”the NGOs said. In May this year Minister of Finance Matia Kasaija inaugurated the seven member Investment Advisory Committee, chaired by Professor Samuel Sejaaka. The major role of the Committee is to advise on the investments to be made under the Petroleum Revenue Investment Reserve (PRIR). However, the NGOs claim the Committee was not given key operational guidelines.

The Bank of Uganda annual report released on Wednesday shows that the Fund had a combined balance of Shs301billion ($74.8m) on the dollar account and Shs28.2billion on the shillings account, at the start of the financial year in July. Efforts to readily speak to Ministry of Finance officials on the matter were futile, however the Ministry has always maintained that government cannot keep the funds lying idle yet there are many unfunded priorities.

Announcing the withdrawal of Sh200billion from the Petroleum Fund last financial year, Finance Minister Matia Kasaija said the funds were to help finance Uganda’s 2018/2019 spending plan which included development of infrastructure, among them; power plants and roads.

About the Petroleum Fund

The Oil or Petroleum Fund is the money collected by the government from oil-related activities including what’s generated from the output as well as pre-production transactions. Government started receiving revenue deposits from the transactions in 2015.

Although France’s Total SA, CNOOC Ltd. of China and the London-based Tullow Oil Plc are developing Uganda’s crude finds in the Albertine Graben, the oil fund is exclusively managed by the Ministry of Finance. A total of 6 billion barrels of oil resources are estimated from Uganda’s oil wells, with commercial production estimated to start in 2022.