The Auditor General, John Muwanga’s just released December 2019 audit report has exposed the rot in the management of the Petroleum Fund, with the AG confessing to have been locked out of the Fund by denying him vital information.
Muwanga made the revelation this morning while handing over the Audit report to Speaker Rebecca Kadaga at Parliament.
The Auditor General says that at the beginning of the year, the Fund had an opening balance of Shs457.5bn and it received revenue totaling to Shs56.7Bn during the year. A sum of Shs200Bn was transferred to the Consolidated Fund for budget support as part of domestic financing for 2018/2019.
“However, there was no explicit disclosure of the infrastructure and development projects that would be funded from the petroleum revenues and I therefore could not confirm whether the amount was used to finance infrastructure development of Government,” Muwanga said.
The report further revealed that the process of appropriation and eventual transfer of Petroleum Funds to either the Uganda Consolidated Fund or PRIR (Petroleum Revenue Investment Policy)is not guided by any fiscal rule but left to the discretion of the Ministry of Finance during the budget formulation process and Parliament which lacks guidance in assessing and approving Government proposed spending and investment of oil revenues during appropriation.
Muwanga warned that the lack of a fiscal rule can lead to undesirable spending and investment decisions by Government that may not be economical, especially in times of economic instability.
Government explained that the draft fiscal rule options had been developed and were awaiting cabinet approval.
“I advised Government to expedite the process of approval of the fiscal rule,” Muwanga said.
The Audit report also noted that although Government appointed the Investment Advisory Committee, there was no approved Petroleum Revenue Investment Policy and Investment Framework developed to guide on the operations of the Petroleum Revenue Investment Reserve by Bank of Uganda.
Muwanga said that the lack of an approved PRIP delays appropriation of the petroleum funds for investment and their subsequent investments to grow the Fund.
He added that without an operational management agreement, the funds will continue to remain unutilized on the Petroleum Fund account without maximizing any returns that could have been obtained if funds were invested without causing undue risk to the Fund.