*Cosme da Costa Araujo
Lao
Hamutuk and the
Diplomat rightly pointed out that Petroleum Fund balance decreased in Q3,
compared to Q2 balance. The decrease, as they mentioned, was due to foreign
exchange losses and also transfer made to the State Budget.
But arguing that "FOR THE FIRST
TIME, EAST TIMOR'S INCOME FROM OIL AND GAS OPERATIONS DID NOT EXCEED THE
EXPENSES RELATED TO THE OIL FUND" is unfair.
It seems that their
conclusion is based on the following calculation - petroleum revenues in Q3
($522 mil) minus losses and transfers ($340+231), resulted in about negative
$50 mil.
However, it is an
unfair comparison in terms of the time period and not a true representation of
the withdrawal. Ideally, the government should smooth the expenditure
(withdrawal) over the year, by taking out $158 mil/quarter (of total ESI amount
of $632 that is expected to be withdrawn in 2014).
The $340 mil amount
mentioned here is the total amount the Government had withdrawn so far in 2014
from the Petroleum Fund, just half of the budgeted ESI amount. This amount
happened to be a "lump sump" withdrawal in Q3 (as no withdrawals were
made in Q1 & Q2). Q3 therefore is bearing the burden of the withdrawal.
To be fair, in term of
period comparison, it is better to look at the-year-to-date (YTD) numbers. In
doing so, we can see that even if the Government manages to withdraw total ESI
amount ($632 mil) by the end of 2014, it is still less than the total revenue
received for the year to date ($1,606 mil), not to mention revenues from
investment return ($365 mil year to date).
The declining trend in
revenue is something that the Government acknowledges publicly in its Annual
Budget Book 1. According to that report revenues have peaked in 2012 and are expected
to decline from 2013 onward until they cease in 2020 - 2022.
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