13 A Critical Intertemporal Analysis of Uganda’s Fiscal Regime …
425
Therefore, subsequent regimes could benefit from either increasing the
production thresholds and royalty percentages while maintaining ringfencing at contract area level or maintaining of the current DROP and
reducing the ring-fence applicable to the field level. Furthermore, the
sliding scale could be advantageous in the later stages of production as
it would impose a reduced fiscal burden on a declining field providing
additional incentive for reduction of the ring-fence to the field level.
Uganda’s Fiscal regimes have increased in the level of regression over
time. This, on the one hand, provides stable and secure Government
revenues; however, on the other hand, it limits the Government to take
on the project upside due to high resource prices or reduced project costs.
The theoretical regime was sighted to be progressive with regard to the
Buliisa and KF-KT projects. However, in line with the theory, it imposed
a higher fiscal burden on the KF-KT project to its lower profitability.
The Buliisa and KF-KT projects were found to be averagely viable
at a 9% discount rate and marginal at a 12.5% discount rate. The
fiscal regimes in place were further cited for providing significant incentives to the IOCs to significantly improve project profitability, therefore
increasing their upside take. The Government, therefore, should reduce
the non-price risks within the country and carefully monitor the resource
development.
References
Primary Sources
Value Added Tax (Amendment) Act of Uganda, 2015.
Petroleum (Exploration, Development and Production) Act, 2013.
Secondary Sources
Boadway, R., and Keen, M., 2010. Theoretical Perspectives on Resource Tax
Design. In The Taxation of Petroleum and Minerals (pp. 29–90). Routledge.
425
Therefore, subsequent regimes could benefit from either increasing the
production thresholds and royalty percentages while maintaining ringfencing at contract area level or maintaining of the current DROP and
reducing the ring-fence applicable to the field level. Furthermore, the
sliding scale could be advantageous in the later stages of production as
it would impose a reduced fiscal burden on a declining field providing
additional incentive for reduction of the ring-fence to the field level.
Uganda’s Fiscal regimes have increased in the level of regression over
time. This, on the one hand, provides stable and secure Government
revenues; however, on the other hand, it limits the Government to take
on the project upside due to high resource prices or reduced project costs.
The theoretical regime was sighted to be progressive with regard to the
Buliisa and KF-KT projects. However, in line with the theory, it imposed
a higher fiscal burden on the KF-KT project to its lower profitability.
The Buliisa and KF-KT projects were found to be averagely viable
at a 9% discount rate and marginal at a 12.5% discount rate. The
fiscal regimes in place were further cited for providing significant incentives to the IOCs to significantly improve project profitability, therefore
increasing their upside take. The Government, therefore, should reduce
the non-price risks within the country and carefully monitor the resource
development.
References
Primary Sources
Value Added Tax (Amendment) Act of Uganda, 2015.
Petroleum (Exploration, Development and Production) Act, 2013.
Secondary Sources
Boadway, R., and Keen, M., 2010. Theoretical Perspectives on Resource Tax
Design. In The Taxation of Petroleum and Minerals (pp. 29–90). Routledge.