Uganda Petroleum Fund (proposed)

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Uganda's draft public finance bill calls for the establishment of a Petroleum fund "into which shall be paid all the petroleum revenue which accrues to Government".[1]

The Petroleum Fund is to be established in the Bank of Uganda and controlled by the Ministry of Finance Planning and Economic Development (MoFPED) on behalf of the Ugandan government. The (MoFPED)'s Oil and Gas Revenue Management Policy states that it will be a "financing fund" with the dual objectives of a) budget financing and b) providing savings for future generations.[2]

Management and function

The Petroleum Fund will be separate from the Consolidated Fund, in which all other government revenues are deposited.[2] The fund will be managed by the Ministry of Finance, the Bank of Uganda and an advisory committee from various line ministries. The fund is to be assessed by the Auditor General. David Mugisha, a senior economist at the MoFPED, said that a portion of the fund would be invested abroad, possibly in the United States, to minimize risks of spending large foreign exchange in a domestic economy.[3]

The draft public finance bill defines the types of revenues flowing into the fund and how the component accounts will be managed, sets rules on depositing and withdrawing from the fund, establishes how the principal and interest earnings may be employed by the government, and determines what procedures are to be followed to limit pro-cyclical influences on fiscal policy, e.g. stabilization mechanisms.[2]

Mechanism

The Petroleum Fund will receive all revenues from oil taxes, non tax related revenues and any revenues realized from the disposal of the share of profit oil received in kind. Revenues will first go into the petroleum revenue holding account, where a certain amount will be deposited into the consolidated fund for annual budget funding. The remaining balance of the holding account will then be transferred to a petroleum revenue investment reserve, from which investments will be made according to an established investment strategy, whose design lies with the MoFPED.[2]

References

  1. The Public Finance Bill, 2012Cabinet, January 2012.
  2. 2.0 2.1 2.2 2.3 Oil and Gas Revenue Management PolicyMinistry of Finance, Planning and Economic Development, February 2012.
  3. Uganda to establish petroleum FundEast African Business Week, 11 September 2011.