Members of Parliament have asked the Auditor General to provide an audit of the amount of money being claimed by the oil and gas companies in the form of recoverable costs. The matter came up on Tuesday during Parliament’s Budget Committee meeting with the Office of the Auditor General.
Amos Kankunda, the Committee Chairperson and the Rwampara County Representative, called on the Auditor General to “provide clear information on the frequency of these audits.
Gyaviira Lubowa Ssebina, the Member of Parliament for Nyendo-Mukungwe Municipality, observed the scale involved, noting that “US$3.1 billion equates to more than Shs11 trillion, far exceeding the roughly Shs1.4 trillion in petroleum revenue projected in the current national budget”
Under Uganda’s production-sharing agreements with partners including TotalEnergies and China National Offshore Oil Corporation (CNOOC, companies recover eligible exploration, development and production costs from a portion of oil output (cost oil) before remaining production is shared as profit oil with the government.
The costs are monitored and approved by the Petroleum Authority of Uganda.
The Office of the Auditor General is required to audit the returns filed by the companies to determine whether they are inflated. The audit can allow or disallow the claims as required in practice.
The Auditor General was represented by James Bantu, who told the committee that oil companies submit annual cost compilations, which are examined against the laws of the country and the production-sharing agreements that govern the sector.
Bantu assured the Committee that their office systematically audits the US$3.1 billion, approximately Shs12.18 trillion, in recoverable costs claimed by oil companies.
According to Bantu, rigorous auditing of these claims is central to protecting public revenues.
“The Office of the Auditor General has long held this mandate; earlier reviews, including of costs claimed between 2001 and 2011, disallowed substantial amounts after finding certain expenditures ineligible.”
The demand by the legislators comes amid concerns that the oil companies may claim more money than they have invested in preparing the country for oil production.
The MPs warned that higher capital expenditure, inflation and potential shifts in global oil demand could compress government revenues more than investor returns, given the structure of the agreements.
The Committee noted that petroleum revenue is expected to form a meaningful but still limited contribution to the national budget in the early years of production.
“Effective cost oversight by the Auditor General, under parliamentary scrutiny, directly affects how much of the eventual output translates into royalties, profit oil, taxes and equity returns for the Uganda National Oil Company,” Akankunda emphasized.
Meanwhile, Gyaviira noted that weaknesses in verification could “defer or diminish the fiscal resources available for infrastructure, social services and economic diversification.” The session emphasises Parliament’s oversight role in the petroleum sector as construction advances and first oil approaches-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
