The government has tabled fresh amendments to the Public Finance Management Act, to allow the Uganda National Oil Company (UNOC) access proceeds from the sale of its interest in crude oil.
UNOC is a government company incorporated in June 2015 to handle the government’s commercial interests in the petroleum sub-sector and ensure state participation in petroleum activities.
The company is also mandated to investigate and propose new upstream, midstream, and downstream ventures locally and internationally.
The government is now seeking to empower UNOC to meet financial obligations arising from applicable Production Sharing Agreements and Joint Operating Agreements in each year, based on an approved Work Program and Budgets for the calendar year.
The amendments will also enable the government to meet obligations borne by Uganda National Oil Company on its own behalf as well as the State as provided for in the relevant contractual agreements, including the Host Government Agreement, the Tariff and Transportation Agreement and applicable laws.
“UNOC is required to deposit the proceeds retained after expending money for the two into the Petroleum Fund. Part of these proceeds may then be appropriated by Parliament to fund approved investments of the Uganda National Oil Company,” reads part of the Bill.
The Bill was read for the first time by Amos Lugoloobi, the Minister of State for Planning in the ministry of finance planning and economic development.
Under the existing law, Section 56 establishes the Petroleum Fund into which all petroleum revenues which accrue to the government must be paid.
This implies that all proceeds, including those arising from the sale of the State Participation, should be paid directly into the Petroleum Fund.
“The Act, therefore, does not provide for a mechanism by which the obligations of UNOC as a licensee under the Production Sharing Agreement (PSA) and Joint Operating Agreement (JOA) are met in a manner consistent with the key contractual provisions, including cost recovery, under the Production Sharing Agreements and Joint Operating Agreements,” reads the Bill.
The Bill further reads that the existing Act does not provide for the payment of tariff obligations under the Host Government Agreement (HGA) and Transportation and Tariff Agreement (TTA), before net proceeds can be deposited into the Petroleum Fund.
The Bill has been referred to the Parliament’s Finance Committee for consideration, by the deputy speaker Anita Among.