It has indeed puzzled many financial experts, but Uganda Revenue Authority (URA) has posted its first returns from the petroleum sector that is currently in the fetal stage after the announcement came that the Treasury had, by yesterday, obtained $720m worth of levy from an aggregation of six exploiting firms.
The revenue body’s Commissioner-General, Allen Kagina, declined to divulge further on the expenses that every debit side brings, though on the question of budget, the Minister for General Duties, Fred Omach, said that the government had already earmarked Ush1.1 trillion, of the revenue, for the building of a 600-megawatt hydro undertaking in Karuma.
Apparently, the taxes that accrue to this huge sum that many analysts are skeptical about concerning how they will impact on the relatively small GDP of Uganda, emanated from levy-collection records, ranging between 1997 and 2013 and had six firms alongside ten subcontracting companies providing the finances.
The Uganda Petroleum industry
Uganda has lately struck fresh discoveries of fossil resources just as Kenya, to the east, also made finds though the difference between the two countries is that the Ugandan ones are already full confirmed finds that can enjoy pre-exploitation revenue.
Political steam has already visited upon the young industry that has opposing sides questioning the feasibility of the slated date for initial production, 2017, even as the government stays clandestine on a fiscal case involving a UK oil firm that allegedly has a levy bone to chew.
The country, however, is of the policy that the fetus of the black gold may yet turn out to be a lucrative foundling that will be attracting $2 billion year-in-year-out, a projection that has experts warning of exaggeration.
Critics are taking the hypothesis of Saudi Arabia as well as other traditional producers, a country that only amasses $3 to $5 for every barrel. In the Uganda case, every barrel will be a shared fortune where the state will merely get something like 60-70%, a proportion that will only be profitable if the production capacity remains stable.
Indeed, Uganda may benefit highly if the right methodologies and revenue-sharing policies evolve, especially where foreign companies are involved.
The stakes on the marketing side of Uganda petroleum may need a miraculous knee-jerk push to make them count, because for one, as an upstart producer, its resources will be expensive to market abroad. A case in point is Ghanaian oil whose 200000bbl, each thirty days, was too tiny proportion on the global average to attract serious notice, leaving the state to settle on a single foreign conduit, until production improves for considering other competitive outlets.
However, Uganda can do well to produce and use its resources inside its borders to fill the yawning gap of energy where each 12 months, the power deficit rises by about 500 megawatts. Furthermore, refining its oil in the coast of Kenya or Dar es Salaam will prove costly, eventually.
Even as the East African country makes its initial fiscal gains before a jet of oil comes off any of its fields, there is much to deliberate upon, analysts argue.