412
A. R. Tom
field. This benefit would only apply if there were only one declining field
within the ring-fence, further providing an incentive for reduction of the
ring-fence to the field level.
The low threshold rates highlight the geological uncertainty that
surrounded the initial developments, and newly available data could
enhance the design of future regimes. The theoretical regime was
proposed to reduce the fiscal burden on marginal projects and fields
and provide more responsiveness to the Government revenue to project
profitability regardless of the level of production.
13.4.2 Quantitative Analysis of Uganda’s Fiscal
Regime
13.4.2.1 Minimum Effective Royalty (MER)
The royalty imposed interacts with the cost recovery limit to form an
added layer of royalty, and the minimum effective royalty imposed by
the different fiscal regimes are summarized in Fig. 13.1. This provides
an indication of the minimum share of gross revenues a government
28%
29%
31%
30%
25%
26%
27%
28%
29%
30%
31%
32%
EA1 PSA 2004
EA3A PSA 2004
EA1A PSA 2012
Theoretical terms (Rfactor)
Minimum Effective Royalty (MER)
Fig. 13.1 Minimum effective royalty implied by the fiscal terms