UGANDA: Parliament Passes the Public Finance Management (Amendment) Bill, 2021

The Uganda National Oil Company (UNOC) will now retain a portion of the proceeds from the sale of petroleum products following the passing of the Public Finance Management (Amendment) Bill, 2021.

During the Tuesday, 14 December 2021 plenary sitting, chaired by Deputy Speaker Anita Among, legislators amended the Public Finance Management Act, 2015.

The amendment guarantees UNOC access to the proceeds from the sale of its interest in the crude oil in order to meet all its financial obligations arising from applicable Production Sharing Agreements and Joint Operating Agreements in each calendar year.

UNOC is a limited liability petroleum company that manages the government’s commercial interests in the petroleum sector and ensures that the resource is exploited in a sustainable manner.

The Chairperson of the Committee on Finance, Planning and Economic Development, Hon Keefa Kiwanuka, said that whereas the committee recommends that UNOC retains a portion of the proceeds, such proceeds should only be used after approval by Parliament.

“The committee agrees that UNOC can retain some money at source. This is intended to mitigate the risk of money being remitted to the Petroleum Fund and then is used for other competing demands. Retaining revenue at source is the considered opinion of the committee that this will assure partners in the joint venture that, in any case, money is available,” Kiwanuka said while presenting the Committee report.

In the Minority Report, Hon Muhammad Muwanga Kivumbi, the shadow Minister of Finance, Planning and Economic Development, expressed fears that granting UNOC powers to collect funds from petroleum may undermine the powers of Uganda Revenue Authority (URA) that is mandated to collect all revenues on behalf of government. Muwanga Kivumbi was also worried that the new law allows UNOC to have direct access to petroleum revenue without appropriation by Parliament and before it is deposited into the Petroleum Fund.

“Given the huge proceeds that will accrue from petroleum, a state enterprise would be created with no appropriation control from Parliament. This raises a risk of establishing a patronage enrichment enterprise that is exposed to massive corruption,” Muwanga Kivumbi said.

However, the Attorney General, Hon Kiryowa Kiwanuka, allayed the Member’s fears saying, allowing UNOC to retain money and spend at source of the petroleum revenue will not take away the powers of Parliament to appropriate.

The Public Finance Management (Amendment) Bill, 2021 is one of three bills that Parliament has passed purposed to facilitate oil and gas activities. The others are; the Income Tax (Amendment) (NO.2) Bill, 2021 and the East African Crude Oil Pipeline [EACOP] [SPECIAL PROVISIONS] Bill, 2021.

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