The Uganda Law Society (ULS) wants 30% oil revenue saved for the future generation.
ULS has also backed the proposal by Government to allow the Uganda National Oil Company to spend oil money without approval of Parliament.
ULS’s views were revealed by Asmahaney Saad, Head Natural Resources Cluster at Uganda Law Society while appearing before Parliament’s Finance Committee to submit the Society’s position on the Public Finance Management Amendment Bill 2021.
“Is there a future for this revenue, and if it is there, why don’t we preserve it now? There should be an addition to say, 30% annual investment to the Petroleum Revenue Investment Reserve for purposes of creating a sovereign wealth fund and any investment. This is sort of a forced pension of government, the oil isn’t just for today, it isn’t just for midterm,” Saad said.
Anthony Akol (Kilak North) welcomed the proposal, saying Uganda should emulate United Arab Emirates.
“We should make sure that the amendment should cater for the future generation. When you go to countries like Dubai, the oil is no longer there but you can see the effect of what they have done with the money that was got from the oil. And I think this is a concern that we will take seriously,” he said.
Although Muwanga Kivumbi (Butambala County) welcomed the proposal to save a portion of oil revenue, he wondered why Uganda doesn’t instead emulate Norwegian countries where they are putting up these funds into a strategic investment to turn a finite resource into an infinite benefit, than stashing money somewhere.
“What if we invest this money strategically and we transform the fortunes of the country and our generation will find a better to live in than stashing money saying it is in a fund?” he asked.
Maximus Ochai(West Budama North) welcomed the proposal although he disagreed with the percentage being proposed, saying Uganda is a poor country and has poor financial discipline and only such saving would help future generation benefit from the oil wealth.
He said, “As a poor country, I think 30% is on the lower side given the tendency to inefficiently utilize, how I wish we could take it up to about 70% and in the process we can be able to strengthen our public financial and be able to utilize that money efficiently.”
Uganda law Society also defended the decision by Government to give powers to UNOC to spend money at source, arguing that Uganda has already entered into agreements with private oil companies and any default on Uganda side would attract fines, and some companies can even takeover our oil to recover their debts.
She explained, “Government committed through the joint operations agreement, there are cash calls that are going to be made to government and that is the reality and when cash calls are made and we don’t immediately make our payment, there are default clauses in these agreements. We see that we are pushing ourselves deeper into the pit. We also see that interest accrues the oil companies can take over the oil interest if continuous default occurs.”
However, Kivumbi said there should be other options taken, instead of giving UNOC a blank cheque to spend at source, citing an example of a similar case in Angola that saw the former President entrust his daughter in charge of the nation’s oil company, who later emerged as the richest woman in Africa.
The government should first fight corruption.