By KT Reporter
The proceeds expected from Uganda’s oil will be invested in foreign assets rather than domestically, according to the Petroleum Revenue Investments Reserve (PRIR) management.
PRIR is a sovereign wealth fund, a savings and investment vehicle for petroleum revenues. It holds money meant for savings from the oil revenues in the Petroleum Fund, which the government is not spending.
It is meant for long-term investment, allowing the country to save today’s oil wealth and turn it into lasting prosperity for future generations.
By choosing to invest the revenues abroad, the Bank of Uganda, which is the custodian of PRIR, is being cautious so as not to destabilise the Ugandan economy. Investing the funds in the country creates an inflationary risk.
Martha Kiiza Kalema, the team leader at the investment reserve at BoU, adds that investing the money within the country would mean investing in the government treasuries, but that this would mean outcompeting everyone else because of the size of the money bag.
The government’s working figure for its annual revenues is USD 2.4 billion (some estimates have put it at 5.6 billion), with an estimated USD 70 per barrel of crude oil, though this is considered a remote estimate.
Perhaps the USD 5.6 billion figures do not take into account the cost of oil (the portion of produced oil that an oil company can sell to recoup its expenses for exploring, developing, and producing the oil).
However, the USD 70 per barrel is projected when the country hits the production peak of 230,000 barrels per day, according to Kalema.
The government and the oil and gas companies have set their sights on July 2026 as the expected date for the first oil flow.
It is expected that by then, all needed infrastructure, including the central processing facilities and the East African Crude Oil Pipeline, will be ready. The refinery is expected another year or so after that.
The impact of the refinery, with the expected capacity of an initial 60,000 barrels per day, will include reducing the import bill as the country will be able to largely consume oil produced locally.
But other byproducts from the refinery are also expected to significantly reduce the imports, according to Peter Rumanzi, an accountant with BoU.
Transparency of PRIR
On how the oil revenues will be protected from misuse, Kiisa says transparency is provided for in the laws, including the Constitution and the Public Finance Management Act. For example, the law compels PRIR to regularly release monthly reports, annual reports, summary performance reports monthly and a live fund balance.
There will also be a “live fund balance”, which updates monthly, to help people keep track of the movement of the balances.
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