After the successful passage of the PPP/C government’s amendments to the Natural Resource Fund (NRF) Bill in the National Assembly on Wednesday night, President Dr. Irfaan Ali has signed the Act into law.
Education Minister Priya Manickchand uploaded a photograph of the Act, signed by President Ali, on Friday morning. The President’s assent is dated December 30, 2021, one day after the amendments were approved in the House.
The government can, in the first instance, withdraw all oil revenues accumulated in the Natural Resource Fund (NRF) in the year that the new law comes into force and thereafter a limit will be set for future withdrawals.
The proposal is for the funds to be used for “national development priorities including any initiative aimed at realising an inclusive green economy” and “essential projects that are directly related to ameliorating the effects of a major natural disaster.”
The law sets out how the country’s petroleum revenues will be spent – this includes monies earned from oil sales, royalties and any signing bonuses.
Under the law, the government can, on the very date the law is signed by the President, withdraw “the total balance accumulated” in the account at the Federal Reserve Bank of New York. Oil sales and royalties thus far stand at US$534 million, without taking into account payment for the last shipment.
After the first withdrawal, the proposed legislation sets out a limit or ceiling on withdrawals. In any given year, US$500 million can be withdrawn and then a reducing percentage of what remains, starting with 75% from the second five hundred million; 50% on the third five hundred million; 25% on the fourth five hundred million; 5% on the fifth five hundred million, and then 3% of any amounts in excess of US$2.5 B.
According to Section 16(2) of the amendments, all withdrawals from the Fund shall be deposited into the Consolidated Fund, meaning that Parliament will know how the money is being spent and the National Assembly will have to give approval.
Another key amendment to the NRF Act brings the fund in compliance with the Santiago Principles, which require that it is governed by a body appointed by the owners, namely the government. A Board of Directors will now govern the Fund.
The new NRF law also now contains criminal repercussions, viz. a ten-year jail term, for the Minister of Finance or any other public official if they receive money without disclosure.
Meanwhile, the President has also signed the Fiscal Management and Accountability Amendment (FMAA) legislation into law. This was also passed in the National Assembly on Wednesday night.
It is expected to strengthen and streamline the budget process for Constitutional Agencies and simultaneously preserve the independence of those agencies.
