Kampala submits bill that would ease UNOC’s access to oil revenues

Uganda’s government has drawn up legislation that would allow the national oil company (NOC) to access the proceeds from its share of future crude production.

According to The Independent, the government has included provisions to this effect in the Public Finance Management (Amendment) Bill 2021, which was submitted to Parliament on October 15 by Minister of State for Finance, Planning and Economic Development Amos Lugoolobi. Anita Among, the deputy speaker of Parliament, has referred the bill to the finance committee for review, the newspaper reported.

In the event that the new legislation is approved, Uganda National Oil Co. (UNOC) will be able to use revenues from the sale of its share of crude production to cover its own obligations and expenses, including tariff payments. This will put the company in a better position to meet its commitments to the East Africa Crude Oil Pipeline (EACOP) project, as outlined in the host government agreement (HGA) and tariff and transportation agreement (TTA) signed earlier this year.

The bill further states that UNOC may not retain oil revenues beyond the amount needed to cover its contractual expenses and obligations. The state-owned company must transfer any surplus funds left over after upholding its commitments to the government and to its partners into Uganda’s sovereign wealth fund, known as the Petroleum Fund.

Additionally, the draft legislation stipulates that Uganda’s Parliament must appropriate the necessary funds in order to cover UNOC’s approved investments.

This bill effectively serves to amend Section 56 of the country’s Public Finance Management Act 2015, which laid the groundwork for the establishment of the Petroleum Fund. That act calls for all revenues accruing to the Ugandan government from petroleum-related activities to be paid into the fund. As such, it implies that the government’s share of the proceeds from future oil sales must also be deposited in the fund, whence it cannot be easily withdrawn, even if UNOC is having difficulty meeting its financial commitments to Kampala and to its partners. The new bill helps to cover that gap and protect UNOC’s interests.