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Gov’t Set to Raid Petroleum Fund Again

According to Bank of Uganda, government will withdraw 445billion shillings which will be transferred from the fund to the consolidated fund for government to pay for the 2019/20 financial year budget activities
Uganda hoped to save its money from oil activities in the petroleum fund

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Uganda government will once again withdraw money from the petroleum fund and use it to fund the 2019/220 financial year budget.

According to Bank of Uganda, government will withdraw 445billion shillings which will be transferred from the fund to the consolidated fund for government to pay for the 2019/20 financial year budget activities.

There is no money that has been put in the Petroleum Revenue Investment Reserve for investment, BoU notes in the 2018/19 report.

This is not the first time government is drawing money from the petroleum fund. Last financial year, government withdrew Shs 200bn to fund the financial year 2018/19.

This puts into question government’s constant claim that it would save money from oil activities for the future.

Paul Lakuma, a research fellow at the Makerere University-based Economic Policy Research Centre (EPRC) said in the ideal situation, Uganda should be keeping that money. 

However, he said, the country has many gaps, including infrastructure, health, education, and housing.

It cannot, he said, afford to keep money somewhere when it has all these unfunded needs. He said the question should be whether we are using the money to fund the right development needs.

//Cue in: “ideally, we should save…

Cue out: …money correctly.”//

Officials from ministry of finance told reporters then that government can’t keep money lying idle yet it has unfunded priorities.

BoU says for this lot, it has not received annual cash flow plan of government in line with section 59(2) of the Public Finance Management Act 2015, where money appropriated to the Consolidated Fund from the Petroleum Fund shall be withdrawn quarterly.

BoU said they had anticipated capital gains tax of about USD167 million from Tullow Oil (U) Ltd on the sale of part of its stake to Total E&P and CNOOC (U) Ltd.  

The deal collapse last month after oil companies and government failed to agree on tax relief and recoverable costs issue.

As at July 1, 2018, the opening balance on the Petroleum Fund was USD 87.3 million and UGX 121.8 billion.

During the year, the inflows were of USD 1.4 million and UGX 54.7 billion while the outflows of UGX 200 billion was transferred to the Consolidated Fund to finance the 2018/19 budget.

Consequently, as at June 30, 2019, the Fund balance stood at USD 74.8 million and UGX 28.2 billion. The Fund’s money is kept in both dollars and Uganda Shillings denominations.  

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