KAMPALA — Parliament is scrutinising more than $3.1 billion (about Shs11.3 trillion) in costs claimed by oil companies for recovery as lawmakers seek clarity on how the expenditures could affect Uganda’s future petroleum revenues.
The Assistant Auditor General, Mr James Bantu, told the Parliamentary Committee on Budget on Tuesday that oil companies submit annual compilations of costs to the Office of the Auditor General for verification before the expenditures can qualify for recovery.
“The companies submit annual cost compilations, and these are audited against the applicable laws and the Production Sharing Agreements,” Mr Bantu told the committee.
His explanation came as MPs questioned the frequency of the audits and whether the growing value of recoverable costs could reduce the petroleum revenue available to government when commercial production begins.
Rubanda County East MP Amos Kankunda asked officials to clarify how often the audits are conducted, saying Parliament needs timely information as Uganda moves closer to first oil.
Buikwe South MP Gyaviira Lubowa raised concern over the size of the claims, noting that the $3.1 billion figure is several times higher than the Shs1.44 trillion in petroleum revenue projected in the Shs84.39 trillion national budget for the 2026/27 financial year.
The $3.1 billion figure does not represent money that government has agreed to pay directly to the oil companies.
Under Uganda’s Production Sharing Agreements, companies finance exploration, development and other approved petroleum activities. Once commercial production begins, eligible costs can be recovered from a portion of the petroleum produced, subject to the terms of the agreements.
The remaining production is then shared between government and the contractors according to the agreed fiscal arrangements.
This makes the verification of recoverable costs important because expenditures approved for recovery can affect the amount of petroleum available for profit sharing.
The Petroleum Authority of Uganda oversees annual work programmes and budgets in the sector, while the Auditor General carries out independent audits of company accounts to establish whether claimed expenditures meet the applicable requirements.
Uganda’s previous petroleum audits provide an indication of how the verification process can affect the amount of costs ultimately approved.
An audit conducted in 2021 examined about $3.4 billion in costs claimed by companies involved in the country’s major oil projects.
Of that amount, approximately $2.9 billion was approved for recovery, while about $439 million — equivalent to roughly Shs1.6 trillion at the time — was disallowed after failing to meet the required standards.
The earlier audit has become a reference point for lawmakers as investments in the sector have continued to increase.
The Petroleum Authority has disclosed that total investment in Uganda’s oil sector had reached about $12.3 billion by 2025.
This means significant expenditure has been incurred since the period covered by the earlier audit, increasing the importance of regular scrutiny of costs submitted for recovery.
Mr Kankunda said Parliament needed clearer information on the timing of the audits as oil-sector investment grows.
“We need to know how frequently these audits are done,” he said.
The parliamentary scrutiny comes as Uganda steps up preparations for commercial oil production.
The country has named its crude grade Pearl Sweet, while construction of the 1,443-kilometre East African Crude Oil Pipeline is continuing ahead of planned exports through Tanzania.
Uganda has estimated recoverable oil reserves of about 1.65 billion barrels.
The government has presented petroleum as an important source of future revenue, with President Yoweri Museveni repeatedly calling for responsible management of the proceeds.
The 2026/27 national budget also includes expectations that oil production and continued investment in infrastructure will contribute to economic growth.
The Auditor General’s role in the petroleum sector is anchored in Uganda’s constitutional and public-finance oversight framework.
Article 163 of the Constitution provides for the independent auditing of public accounts by the Auditor General, while the Public Finance Management Act and the National Audit Act provide additional responsibilities relating to public finances, including petroleum revenues and the Petroleum Fund.
For Parliament, the immediate concern is obtaining a clear picture of the costs being submitted by oil companies before production starts.
Lawmakers want the audit process to establish how much companies have claimed, how much has been verified, what has been rejected and what remains under review.
The information will be important in determining how Uganda’s future petroleum production is ultimately divided between cost recovery, profit oil and government revenue.