Parliament has amended the Public Finance Management Act and the Income Tax Act to allow the Uganda National Oil Company (UNOC) collect proceeds from national oil sales and retain at least 7% of the money.
The Public Finance Management (Amendment) Bill 2021 and the Income Tax (Amendment) Bill, 2021, provide for utilization of taxes from oil production windfall tax and limitations of deductions on petroleum operations. The Bills presented by the Minister of state for Finance, Henry Musasizi, were passed during plenary sitting on December 14, 2021, chaired by Deputy Speaker, Anita Among.
Key among provisions within the Bills is allowing UNOC to retain a portion of the proceeds from the sale of petroleum products. The amendments will guarantee 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.
The chairperson of the finance committee, Keefa Kiwanuka, noted 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.
However, Butambala County MP, Muwanga Kivumbi, while presenting a minority report expressed fears that granting UNOC powers to collect funds from petroleum is likely to undermine the powers of Uganda Revenue Authority (URA) whose mandate is to collect all revenues on behalf of Government.
Muwanga also expressed his displeasure about the fact that once UNOC is allowed to have direct access to petroleum revenue without appropriation by Parliament before it is deposited into the Petroleum Fund, it will undermine the powers of Parliament which among them is to appropriate.
“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 said.
In response to Muwanga’s submission the Attorney General, Kiryowa Kiwanuka, told the House that allowing UNOC to retain money and spend at source of the petroleum revenue will not take away the powers of Parliament to appropriate.
What is UNOC?
UNOC is a limited liability petroleum company that manages government’s commercial interests in the petroleum sector and ensures that the resource is exploited in a sustainable manner.