Parliament has launched investigations into more than $3.1 billion (Shs11.3 trillion) in costs claimed by oil companies for recovery, with the Auditor General assuring lawmakers that every claim submitted under Uganda’s petroleum agreements is subjected to an annual audit before it can qualify for recovery.
Appearing before Parliament’s Committee on Budget on Tuesday, James Bantu, the Assistant Auditor General, said oil companies submit yearly compilations of recoverable costs to the Office of the Auditor General, where they are examined against Uganda’s petroleum laws and the terms of the country’s Production Sharing Agreements.
“The companies submit annual cost compilations, and these are audited against the applicable laws and the Production Sharing Agreements,” Bantu told the committee.
His remarks came as MPs questioned whether the growing value of recoverable costs could reduce the amount of petroleum revenue that eventually reaches the government once Uganda begins sustained commercial oil production.
During the meeting, Rubanda County East MP Amos Kankunda sought clarification on how frequently the audits are conducted, arguing that Parliament needs timely information as the country moves closer to first oil.
Buikwe South MP Gyaviira Lubowa pointed to the size of the claims, noting that the $3.1 billion, equivalent to about Shs11.3 trillion, is several times larger than the Shs1.44 trillion in petroleum revenue projected in Uganda’s Shs84.39 trillion national budget for the 2026/2027 financial year.
However, officials stressed that the figure should not be interpreted as money automatically payable to the oil companies. Under Uganda’s Production Sharing Agreements, only costs that meet contractual and legal requirements qualify for recovery after verification.
Uganda’s petroleum cost recovery system requires oil companies to finance exploration and development activities before production begins. Once oil starts flowing commercially, eligible costs are recovered from a share of petroleum production, after which the remaining production is shared between the government and the contractors according to the agreed fiscal terms.
The Petroleum Authority of Uganda oversees annual work programmes and budgets, while the Auditor General independently audits company accounts to determine which expenditures qualify for recovery.
That process has become increasingly important because every dollar approved as a recoverable cost affects the volume of petroleum available for profit sharing and ultimately influences government earnings from the sector.
Uganda’s previous petroleum audits have already demonstrated the financial impact of independent scrutiny.
A 2021 audit examined about $3.4 billion in costs claimed by companies involved in Uganda’s major oil projects. Approximately $2.9 billion was approved for recovery, while around $439 million, equivalent to about Shs1.6 trillion, was disallowed after failing to meet the required standards.
That earlier exercise has become a key reference point for lawmakers, especially after the Petroleum Authority disclosed that total investment in Uganda’s oil sector had grown to about $12.3 billion by 2025, leaving a significant portion of expenditure outside the scope of the earlier audit.
Kankunda maintained that Parliament needs greater clarity on the timing of audits as investment in the sector continues to grow.
“We need to know how frequently these audits are done,” he said.
The parliamentary inquiry comes as Uganda enters the final stages of preparations for commercial oil production. Earlier this month, the country officially named its crude grade Pearl Sweet, while construction of the 1,443 kilometre East African Crude Oil Pipeline continues ahead of future exports through Tanzania.
Uganda is estimated to hold about 1.65 billion barrels of recoverable oil reserves, with the government positioning the sector as a major contributor to infrastructure development and economic transformation.
Finance Minister Henry Musasizi built the 2026/2027 budget on expectations that oil production, together with continued investment in infrastructure, will support stronger economic growth in the coming years.
President Yoweri Museveni has also repeatedly described petroleum revenues as an important source of funding for national development while cautioning that the proceeds must be managed responsibly.
Under Article 163 of the Constitution, the Auditor General is mandated to audit public accounts independently, while the Public Finance Management Act and the National Audit Act provide additional oversight responsibilities, including those relating to petroleum revenues and the Petroleum Fund.
For lawmakers, the central issue is whether the audit process remains current, comprehensive and transparent enough to show what has been claimed, what has been verified, what has been rejected and what remains under review before major oil revenues begin flowing into government coffers.
