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Government of the Republic of Uganda

PETR'LEUMFUND
Annual Report on Inflows, Outflows and Assets of the Fund

For the period ended 30th June 2019

 THE PETROLEUM FUND
Report to Parliament
as per 561(l)b of the
PFMA,2015

Table of Contents
Acronyms ................... ... ... ...... ................................................................. .. ...... 2

1.0 Commentary to the Report on the Petroleum Fund ............................. ... . 3

1. 1 Introduction .................... ...................... ......... ............. . .... ...... ...... ....... 3

1.2 Audited Financial Statements ........ ........ .. ..... .. ....... ...... ................. ....... 3

1.3 Fund Value ................................... . ................... ................ . ....... .. .... ..... 3

1. 4 Bank Accounts of the Fund .. ........... ...... ............. . .... ......... ............ ....... 5

1. 5 Revenues and Receivable to the Fund ... ................. ... ..... .... .. ....... ......... 5

1.6 Contingent liability .... ........ ....... ........ .... ......... .. .... .. ........... ......... ..... ..... 6

2.0 Summary of the Inflows, Outflows and Assets of the PF ....... ............ ... .... 7

2.1 Inflows and Outflows ..................... ............. ......... ................................ 7

2.2 Petroleum Fund Position as at 30th June 2019 ... .. ................................ 8

3.0 Details of Inflows, Outflows and Assets ......................................... .. ........ 8

. 1 y 1"1
 THE PETROLEUM FUND
Report to Parliament
as per S61(1)b ofthe
PFMA, 2015

Acronyms

BOU Bank of Uganda

NTR Non Tax revenue

OAG Office of the Auditor General

PF Petroleum Fund

PFMA Public Finance Management Act

PRIR Petroleum Revenue Investment Reserve

PSA Production Sharing Agreement

UCF Uganda Consolidated Fund

UGX Uganda Shillings

URA Uganda Revenue Authority

USD United States Dollars

VAT Value Added Tax

WHT Withholding Tax

2 I Annual Report on th e Inflows, Outflows and Assets of the P etroleum Fund

 THE PETROLEUM FUND
Report to Parliament
as per S61(1)b of the
PFMA,2015

1.0 Commentary t o the Report on the Petroleum Fund

1.1 1ntroduction
The PFMA 2015 [Act] established the Petroleum Fund (Fund) into which all
Petroleum related revenues are deposited. The Act under Section 56(3) bestows
the overall responsibility of managing the Petroleum Fund with the Minister
responsible for Finance.

This report has been prepared in line with Section 61(1)(b) of the Act which
requires the Annual report of the Petroleum Fund to be submitted to
Parliament by 31st December.

The report below details the total revenue collected from petroleum related
activities, a summary of the outflows from the Fund and the Assets of the Fund
for the period from July 1, 2018 to June 30, 2019. Since production has not
yet commenced, nil volumes and values of Petroleum Produced have been
reported.

1.2 Audited Financial Statements

For proper accountability and transparency and in compliance with S60 (b) of
the PFMA 2015, the Statutory financial statements for the Fund were prepared
and submitted by the Accountant General to the Auditor General. The Audited
Financial Statements of the Fund for the current and prior periods are
published on the Ministry website and can be accessed on
(http:// www. finance. go. ug/ Reports).

1.3 Fund Value

The Fund value as at 30th June 2019 was UGX 311,132,323,454 (Three
hundred and eleven billion one hundred thirty two million three hundred
twenty three thousand four hundred fifty four shillings). The reduction in the
Fund value from UGX 470.4billion reported in June 2019 to the current UGX
311.1 billion is due to;-

(i) Withdrawals from the Fund

In line with Section 59 of the PFMA 2015 and the Appropriation Act, a
sum of UGX 200billion[UGX 148billion and USD 13.95 million from the

3 I Annual Report on the Inflows, Outflows a nd Asse ts of the Petroleum Fund

 THE PETROLEUM FUND
Report to Parliament
as per 561(J)b of the
PFMA, 2015
Petroleum Fund UGX and USD accounts respectively] was transferred
from the Petroleum Fund to the Uganda Consolidated Fund (UCF) to
fund the financial year 2018 f 20 19 Budget. This is the second time
funds have been withdrawn from the Fund to support the annual
Budget.

(ii) Reduction in the revenues collected from UGX 62.988 billion [30th June
2018] to UGX 56.74 billion [30th June 2019]

(iii)Foreign exchange loss on funds from Petroleum Authority of Uganda

amounting to UGX120.8m. This was due to the appreciation of UGX
against the USD at the time the funds were received on the Petroleum
Fund USD account.

The Fund value of UGX 311.1 billion is constituted by cash and cash
equivalents of USD 74.82 million, UGX 28 .22billion in accounts at Bank of
Uganda and a receivable of unremitted tax revenues by URA of UGX
6 .5billionas at 30th June 2019.

Below is a summary of the cumula tive position of the Fund as at 30th June
2019
Table 1: Cumulative position of the Petroleum Fund

PETROLEUM FUND (UGX)

Opening balance (July 01, 2018) 121,840,546,088
Additions during the period 54,696,862,840
Less : Transfers to the UCF Acco unt (148,321,087,430)
Closing balance as at 30th June 2019 28,216,311,498
PETROLEUM FUND (USD)
Opening Balance (July 01, 2018) $86,525,730
Additions for the period
Surface rentals and training fees 1,423,982
Transfer from PAU (Receivable) 8 13,375
Other receipt s (Bank Charge for FY 2017/18 reversed in FY2018/19) 20
Total additions {USD) $2,237,377
Less: Transfer to the UCF Account ($13,947,634}
Bank Charges ($222)
Closing balance as at 30th June 2019 $74,815,251
RECEIVABLE FROM URA & PAU (UGX)
Opening balance as at July 01, 2018 12,877,415,932
Less: Transfers from the URA & PAU (12,877,415,932)
Add : Unremitted Tax Collections from URA 6,451,964,160
Closing Balance as at 30th June 2019 6,451,964,160

4 I Annual Report on th e Inflows, Outflows and Assets of the P etroleum Fund

 --- - - - -· --------~-----

THE PETROLEUM FUND

Report to Parliament
as per S61(l)b of the
PFMA,2015

1.4 Bank Accounts of the Fund

The Fund is maintained on two separate accounts in Bank of Uganda; one
denominated in Uganda Shillings (UGX) and the other in United States Dollars
(USD). A Nostro account was opened in the Federal Reserve Bank of New York
to facilitate investment of the USD funds under the Petroleum Revenue
Investment Reserve.
T a ble 2 : Bank Acco unt det a ils of t he Petro l eu m F u nd

Account Name Currency Location A/CNO.

Petroleum Fund USD BoU, Kampa la Road 003300328400010

Petroleum Fund UGX BoU, Kampa la Road 003300328000026
BoU Petroleum Fund USD Federal Reserve Ba nk, New York, US 021086676

1.5 Revenues and Receivable to the Fund

Uganda Revenue Authority (URA) is mandated by the PFMA 2015 to collect all
petroleum revenues and remit to the Petroleum Fund Accou nt.

During the Period ended 30th June 2019 , URA collected petroleum related taxes
worth UGX 51.06billion of which UGX 6.74 billion was Incom e tax, UGX 1.02
billion VAT and 43.41 billion as Withholding tax. The amount of UGX 6.45
billion was yet to be remitted to the Fund by 30th June 20 19. Th ese fund s were
remitted after 30th June 2019 and are therefore recorded as a receivable for t h e
reporting period.

In addition , total NTR collected and remitted to the Fund a moun ted to UGX
5.68 billion. This was mainly from surface rentals, training fees , sale of data
and business licenses paid by companies dealing in petroleum activities.

Petroleum Investment Framework

The Investment Advisory Committee was established as per S66 and S67 of the
PFMA, 20 15, and inaugurated in May 2019. The committee's role is to advise
the Minister on Investment of funds under the Petroleum Revenu e Investment
Reserve (PRIR) among other duties, as stipulated in S68(1) of the PFMA 2015.

5 I Annual Report on the Inflows, Outflows and Assets of the Petroleum Fund
 THE PETROLEUM FUND
Report to Parliament
as per 561(J)b of the
PFMA,2015
To facilitate investment under the PRIR in line with PFMA 2015, the Ministry
finalised the draft Petroleum Revenue Investment policy, the Operational
Management Agreement and Terms of reference for the Petroleum Revenue
Investment Advisory Committee. This framework is to guide Bank of Uganda
and the Investment Advisory Committee regarding investment of t h e Petroleum
Fund reserves.

1.6 Contingent liability

A contingent liability is a possible obligation that arises from past events, and
whose existence will be confirmed only by the occurrence or non-occurrence of
one or more uncertain future events not wholly within the control of the entity
(IPSAS 19)1. Under the Production Sharing Agreem ents(PSAs) sign ed between
the Government a n d the various licensees, governmen t will reim burse all the
recoverable costs that are incurred in accordance with t h e PSAs and verified by
the Office of the Auditor General once production commences. The total verified
amount of contingent liability for the ten (10) years (200 1 to 20 11) as
recoverable costs stands at USD 935,692,423. The figure for the period 2012 to
date is still under verification by the Auditor General.

Pursuant to Sec 61 (1) (b) ofPFMA 2015, attached is the Annual Petroleum
Fund Report for the period ended 30th June 2019.

~at· a
'~
Kasaija (MP)
Mifl'i~ of Finance, Planning and Economic Development

1 International Public Sector Accounting Standards

6 I Annual Report on the Inflows, Outflows and Assets of the Petroleum Fund
 THE PETROLEUM FUND
Summary of Inflows, Outflows, and Assets
For the reporting Period ended 30th June 2019
Report to Parliament
:1s per S61(1)h oftbe
PFMA,2015

2.0 Summary of the Inflows, Outflows and Assets of the PF

2.1 Inflows and Outflows

Sale of Petroleum (i)

-~
Tax revenues from Petroleum Activities (USD) (ii)
-- -

Tax revenues from Petroleum Activities (UGX) (i i) - 51,062,144,724 - 46,253,948,139

Non Tax revenues from Petroleum Activities (USD) (iii) 1,523,436.65 5,677,394,359 4,554,309 16,734,523,777
-
Non Tax revenues from Petroleum Activities (UGX)
-
(iii)
------,
- 0 - 0
Foreign Exchange gains (translational) - - - - - - - - - - ____:__I 0 .. _____ -- ..- 26,093,373,451
Total Inflows 56,739,539,083 89,081,845,367

Outflows:
- - - · - - ----- · - -
'
- - - -- - - - -- ----- -~·=----~_-::~ -~=--=~_jl____ ---

__ ___j! _ _ _ _ _
~------- --

-~-- ------

Transfers to the Consolidated Fund _j_ (iv) 200,000,000,000 125,300,000,000

-·-· ·--
Transfers to the Petroleum Revenue Investment
(iv) 0
Reserve
-- - - -~ ... -- - ~ -- -- ---- -- ---- -~ - T

Bank Charges _ _ _ _ _ __j_ (v) 222.13 839,086 180 650,824

- - - --
Foreign Exchange loss (Realized) (v) 120,818,722

7 I Annual R ep ort o n the Inflows, Outflows and Assets of the Petroleum Fund
 (
THE PETROLEUM FUND (
Summary of Inflows, Outflows, and Assets
For the reporting Period ended 30th June 2019
Report to Parliament
as per S61{1)b ofthe
PFMA~2015

2.2 Petroleum Fund Position as at 30th june 2019

Petroleum Fund Assets (USD) (vi) 74,815,250.71 276,464,047,796 338,853,892,856

Petroleum Fund Assets (UGX) (vi) 28,216,311,498 131,562, 270,364
Petroleum Fund Liabilities 0 0
Total Petroleum Fund Reserves 304,680,359,294 470,416,163,220

3 .0 Details of Inflows, Outflows and Assets

Note i: Sale of Petroleum

8 I Annual R ep ort on the Inflows, Outflows and Assets of the P etroleu m F und

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 THE PETROLEUM FUND
Summary of Inflows, Outflows, and Assets
For the reporting Period ended 30th June 2019
Report to Parliament
as per 561(J)b of the
PFMA,2015

Note ii: Tax Revenues

Excise duty
Income Tax levied on Petroleum Operations 6,739,494,266 1,394,867,309
Capital Gains Tax on transfer of Shares 0 0 0
--- ···- -- - --
Tax on contractor Profit oil or gas 0 0
-----------
VAT 1,012,668,668 0
---------- -·-- ·--··
Stamp Duty 0 0
-~ - - -·
Withholding Tax 43,309,981,790 44,859,080,830

9 I Annual R eport on the Inflows , Outflows and Assets of the Pe trole um F und
( (
 (
THE PETROLEUM FUND (
Summary of Inflows, Outflows, and Assets
For the reporting Period ended 30th June 2019
Report to Parhament
as per S61(1)b of the
PFMA, 2015

Note iii: Non-Tax Revenues

I! USD UGX USD UGX

--. - - . ••-• - ---- =
Investment Income _:i_ 0
-- 0 1,035,235 3,740,948,138
Surface Rentals, Training fees and sale of data 1,442,986.65 5,374,653,577 1,808,989 6,749,624,999
-----. ---
Royalties -------- -- ~~- - -~- -- . - ~- __,_ . ·-- -~ --~~--~- ~- J
- 0 0
Signature Bonus 1,709,975 6,243,551,628
----.-----..-- ----------- ------- ·- --- ···-- --. ·--------- ------
Discovery Bonus - - -~ ---------- --·~ - - - 0 0
- -- _ _;l_ - - - - - - - - _:_:L. __ -- -. --· -~-- -
Production Bonus - 0 0
Business/Production License 80,450 302,740,781.5 ___ 110 399,012
----..---- - ·-...·-- .. ------
,..,.
-- --
Share of Profits from oil and gas exploration _ ___].__ ____ - - - 0 0
I
_ _ _ _ _- j!_ _ _
------
Penalties/ surcharges for late Payment - 0 0
Sale of Bid documents (Licensing rounds)
Miscellaneous revenue
=--=~L_ ___ -- ""--~·':u
-
~~-~ . ~u- -~-~-- :lk __
-
0
0
----~-
0
0

10 I Annual Report on the Inflows, Outflows and Assets of the Petroleum Fund

. I
 THE PETROLEUM FUND
Summary of Inflows, Outflows, and Assets
For the reporting Period ended 30th June 2019
Report to Parliament
as perS61(1)b of the
PFMA,2015

Note iv: Transfers out of the Fund

UGX UGX
Transfers t o th e Uganda Consolidated Fund (UCF) 200,000,000,000 125,300,000,000
Transfers t o th e Petroleum Revenue Investment
0 0
reserve

Note V: Other Outflows

11 I Annua l Repo rt o n d te (nflows, O utflows a nd Assets of the Pe tro le um Fund

( (

I
 ( THE PETROLEUM FUND
Summary of Inflows, Outflows, and Assets
For the reporting Period ended 30th June 2019
Report to Parliament
as per S61(1)b of the
PFMA,2015

Note vi: Petroleum Fund Assets

USD UGX USD UGX

Ca sh and Cash equivalents (USD) 74,815,250.71 276,464,047,796 86,525,730 335,698,201,200
Cash and Cash equivalents (UGX) 28,216,311,498 121,840,546,088
-------
Petroleum Received in Kind (Volume) 0 0
---·- --- --· ~~-- ---- -
Price of Petroleum on day of Receipt 0 0
------
Receivable from URA 6,451,964,160 12,877,415,932

12 I Annual R eport on the Inflows, O utflows and Assets of the Petroleum Fund