May 2010 web page on proposed revisions to Petroleum Fund Law

Skip ahead to current state of the Fund

Pajina web Maiu 2010 kona-ba esboso revisaun ba Lei Fundu Petroleu

Atu hetan informasaun atual, liga iha ne'e

Establishment

In October 2004, the Timor-Leste Ministry of Planning and Finance conducted a public consultation on the concept of establishing a Petroleum Fund for Timor-Leste, which would receive revenues from petroleum and manage them in a sustainable way. From January to June 2005, Timor-Leste's government and parliament conducted public consultations and hearings on the Petroleum Fund Act, which was passed unanimously in July 2005.

The Timor-Leste Banking and Payments Authority (BPA), which will administer the Petroleum Fund, signed an Operational Management Agreement with the Ministry of Planning and Finance in July. The BPA published an explanation of how the fund will work in its newsletter the same month.  A new Management Agreement was signed in June 2009, which covers the $1 billion for which the management responsibility has been transferred to the Bank of International Settlements (BIS).

The government announced the establishment of the Petroleum Fund on 22 September 2005.

Civil Society elected its representatives to the Petroleum Fund Consultative Council in February 2006, but the PFCC did not become operational until the end of 2006. Its members, chosen according to the Petroleum Fund Act, include Former Prime Minister Mari Alkatiri, NGO representatives Thomas Freitas (Luta Hamutuk) and Maria Dias (Rede Feto), Parliament's nominees Antero Benedito da Silva and Nuno Rodrigues, Presidential appointee Francisco da Costa Monteiro, Aurelio Guterres (nominated by Parliamentary President Lu-Olu), business sector representative Oscar Lima and church representative Reverend Francisco Vasconcelos.

The lead article in La'o Hamutuk's March 2007 Bulletin is about the Petroleum Fund.

Operation

The fund started in September 2005 with an transfer of petroleum royalties which had been collected in preceding years. During 2005 and 2006, no withdrawals were made.

In December 2006, the Bayu-Undan project moved into a higher "profit oil" tax rate because of the profitability of the project, which is why TSDA receipts increased significantly in early 2007. The first withdrawal (transfer to the Government's operating budget) from the fund ($120,000,000) was made on 21 March 2007, and two more withdrawals totaling $140.07 million were made in May and June. However, most of this money was not spent, but is held in banks and investments by the Government (as distinct from the Petroleum Fund). According to the quarterly Balance Sheets from the BPA (available from www.bancocentral.tl/en/balancesheet.asp), government assets held in the Treasury Account of the BPA (not including the Petroleum Fund) increased from $56.1 million at the end of 2006 to $248.0 million at the end of June 2007.

Estabelesimentu

Iha Outubru 2004, Ministeriu Planu no Finansas hala'o konsultasaun publiku kona-ba konseitu atu estabelese Fundu Petroleu ida ba Timor-Leste, ne’ebé sei simu rendimentu husi petroleu no jere rendimentu sira ne’e iha dalan ne’ebé sustentavel. Husi Janeiru too Junhu 2005, Governu no Parlamentu Nasional Timor-Leste hala'o konsultasaun no audensia publiku kona-ba Lei Fundo Petroleu (Pt), ne’ebé pasa ho votus tomak iha Julhu 2005.

Autoridade Bankaria no Pagamentu (ABP) Timor-Leste nian ne’ebé mak sei administra Fundu Petroleum, asina Akordu Jestaun Operasional ida (Pt) ho Ministeriu Planu no Finansas iha Julhu. ABP publika sai esplikasuan ida atu oinsa Fundu ne’e sei opera iha ninia Boletim Ekonomiku iha fulan ne’ebé hanesan. Akordu Jestaun foun ida asina ona iha fulan Junhu 2009, ne’ebé kobre biliaun $1 ne’ebé nia responsabilidade ba jestaun nian transfere ba Bank of International Settlements (BIS).

Governu anunsia sai estabelesimentu Fundu Petroleu ne’e iha loron 22 fulan Setembru 2005.

Sosiedade Sivil hili ninia reprezentante ba Konselhu Konsultativu Fundu Petroleum iha fulan Fevereiru 2006, maibe KKFP la hala’o nia kna’ar too tinan 2006 nia rohan. Membru sira ne’e, hili tuir Lei Fundu Petroleum nian, inklui eis Primeiru Ministru Mari Alkatiri, reprezentate Sosiedade Sivil Thomas Freitas (Luta Hamutuk), Maria Dias (Rede Feto), Parlamentu Nasional nomeia Antero Bendito no Nuno Rodrigues, Presidente Republika hili Fransisco da Costa Monteiro, Aurelio Guterres (nomeia husi Presidente Parlamento Lu-Olo), reprezentante seitor privadu Oscar Lima no reprezentante husi Igreza mak Reverendu Francisco Vasconcelos.

Artigu prinsipal iha Buletin La’o Hamutuk Marsu 2007 koalia kona-ba Fundu Petroleum

Operasaun

Fundu ne’e komesa ona iha Setembru 2005 ho transferensia rendimentu petroleum nian ne’ebé kolekta ona iha tinan hirak liu ba. Durante 2005 no 2006, laiha osan mak hasai husi Fundu ne’e.

Iha fulan Dezembru tinan 2006, projeitu Bayu-Undan hetan mudansa ba taxa "lukru mina" ne’ebé a'as tebes tamba lukru projeitu ne’e nian, ne’ebé  halo TSDA nia receitas aumenta signifikante tebes iha tinan 2007. Transferensia primeiru (transfere ba Governu nia orsamentu servisu) husi fundu ($120,000,000) halo iha loron 21 fulan Marsu 2007, no transferensia rua tan ho montante hamutuk tokon $140.07 ne’ebé halo iha fulan Maiu no Junhu. Maske, osan ida ne’e barak mak la gasta, maibe rai deit iha banku no investe husi Governu (la'os iha Fundu Petroleum). Tuir relatoriu balansu trimestral husi ABP (bele hetan iha www.bancocentral.tl/en/balancesheet.asp), Governu nia aset rai iha konta tezoureira ABP nian (la inkluindu Fundu Petroleum) aumenta husi tokon $56.1 iha tinan 2006 nia rohan ba tokon $248.0 iha Junhu 2007 nia rohan.

During October 2007, the Parliament of Timor-Leste enacted a $117 million transitional budget for the last six months of calendar 2007, including a $40 million transfer from the Petroleum Fund. The Petroleum Fund Act requires an audited estimate of sustainable income and prior consultation with the Petroleum Fund Consultative Council prior to passing a budget, but this was not done. The PFCC wrote a letter to Parliament objecting to their exclusion from the process. The entire budget could have been funded with the Government's Treasury account (which contained $248 million at the start of the six-month period, $119 of which was unspent obligations from previous years), but the authorized $40 million was transferred from the Petroleum Fund on 18 December 2007. At the end of 2007, the BPA held $189 million for the government in its Treasury Account, although this was reduced to $138 million by the end of March 2008.

Timor-Leste has changed its fiscal year to the calendar year; the budget for 2008 estimates a sustainable income of $294 million, and plans to transfer all of it. As Parliament was debating the budget in December 2007, the Petroleum Fund Consultative Council wrote a Public Declaration (Tetum) questioning some of the calculations.

In June and July 2008, the Government proposed and Parliament approved a mid-year Budget Rectification which increases the 2008 budget by 126%, to nearly $788.3 million. Of this, $686.8 million is to come from the Petroleum Fund, a re-estimated sustainable income of $396.1 million (based on higher oil price assumptions), plus another transfer of $290.7 above the sustainable level. Exceeding the ESI was strongly criticized by, among others, civil society, the IMF, the World Bank, Fretilin and the Petroleum Fund Consultative Council. In November 2008, the Timor-Leste Court of Appeals ruled that going above the Estimated Sustainable Income was illegal as it violates the principles and the letter of the Petroleum Fund Act.

No withdrawals were made from the fund during the first six months of 2008. During the third quarter, $140 million was transferred, with another $256 million in the fourth quarter, using up the full amount of the ESI. During the third and fourth quarter, the amount of money in the government's operating accounts held by the BPA increased from $59 million to $258 million, indicating that only about half of the money transferred from the Petroleum Fund was expended by the end of the year. The balance in the Petroleum Fund at the end of 2008 was $4,196,971,733.

At the end of November 2008, the Council of Ministers approved the State Budget for 2009 and Parliament approved it in January 2009. This budget Estimates the Sustainable Income at $407.8 million, and proposes to spend it all plus $181.2 million additional from the Petroleum Fund during 2009. Link to details of how the Ministry of Finance calculated the ESI for 2009, the Petroleum Fund Consultative Council's preliminary comments on the budget (Tetum), and La'o Hamutuk's analysis of prudence and sustainability of the ESI calculation.

No withdrawals were made during the first quarter of 2009, although $200 million was transferred in the second quarter. The balance at the end of March 2009, reflecting lower deposits and lower return on investments, was $4,750,080,475. Due to sharply reduced income, the balance only increased slightly by the end of June 2009, to 4,901,524,889.

At the end of September 2009, the balance stood at $5,301,568,442, with plans to transfer $207 million during the third and fourth quarters. In early November, the Government changed their thinking, requesting the BPA to transfer a total of $312 million during the fourth quarter, which was done. The $512 million transferred during 2009, exceeds the ESI of $408 million by $104 million. Although this was authorized by the 2009 State Budget, it does not appear to have been necessary in order to fund budgeted programs.

At the close of 2009, the balance in the Petroleum Fund was $5,376,625,558. It only increased by $76 million during the quarter, less than half of the smallest previous quarterly increase in the Fund's history. At the end of December, the balance in the Fund was less than it has been at the end of October, the first ever monthly decline, because withdrawals were greater than petroleum revenues. In addition, the Fund's investments lost more than $5 million during the fourth quarter of 2009, due to declining market values. Over the entire year 2009, Fund investments returned only 0.6%, far below the 3% (above inflation) on which the Estimated Sustainable Income formula is based.

During the first three months of 2010, the fund's investments did somewhat better, and the Government withdrew an additional $100 million. At the end of March the balance was $5,787,178,000. A lively discussion has begun on whether and how to diversify the fund's investments, with the Ministry of Finance planning to propose revisions to the Petroleum Fund Law later in the year.

On 1 June 2010, the Government proposed a mid-year budget adjustment to Parliament, withdrawing up to $811 million from the Fund in 2010, $309 million more than the $502 million ESI withdrawal already approved. La'o Hamutuk's submission discusses how this relates to the Petroleum Fund.

Reports

The BPA is required to publish reports on the Petroleum Fund 40 days after the end of each quarter. The BPA also issues a quarterly press release summarizing the report. La'o Hamutuk reviewed the first report in our December 2005 Bulletin, and published a more comprehensive article on the Fund in our March 2007 Bulletin. Our November 2008 Bulletin also discusses issues relating to the Petroleum Fund and the State Budget. We discussed in the Petroleum Fund on our Tetum-language Radio Igualidade program in March 2009.

Starting with the year 2008, the State Secretariat for Natural Resources publishes an annual Extractive Industries Transparency Initiative (EITI) report, relating money received from petroleum companies during the past year, available from the table below.

Since July 2009, the BPA has published monthly reports about the investments of the Petroleum Fund on their website at www.bancocentral.tl/PF/Reports.asp.

Timor Leste troka ona ninia tinan fiskal ba tinan kalendariu nian; Rendimentu Sustentavel Estimativa ba Orsamentu tinan 2008 mak tokon $294, no iha planu atu transfere hotu osan hirak ne’e. Hanesan Parlamento debate ona orsamentu iha fulan Dezembru 2007, Konselhu Konsultativu Fundu Petroleum nian hakerek Deklarasaun Publiku ida ne’ebé kestiona buat balun husi kalkulasaun ne’e.

Iha fulan Junhu no Julhu 2008, Governo hato'o proposta no Parlamento Nasional aprova Orsamento Rektifikativo ne’ebé hasae pursentu 126 husi total Orsamento Geral 2008, ne’ebé besik tokon $788.3. Hosi ida ne’e, tokon $686.8 mai husi Fundu Petroleum, estimatizasaun fila fali ba Rendimentu Sustentavel hetan tokon $396.1 (bazeia ba asumsaun presu ne’ebé as liu), aumenta ho transferensia seluk, hamutuk tokon $290.7 ne’ebé liu nivel sustentavel nian. Foti osan liu Rendimentu Sustentavel Estimativa nian hetan kritika makaas husi Sosiedade Sivil, Fundu Monetaria Internasional (FMI), Banku Mundial, Fretilin no Konselhu Konsultativu Fundu Petroleum (KKFP). Iha Novembru 2008, Tribunal Rekursu Timor Leste hasai desizaun katak foti osan liu Rendimentu Sustentavel Estimativa ne`e ilegal tanba viola prinsipiu no buat ne’ebé hakerek iha Lei Fundu Petroleum.

Laiha prosesu hasai osan husi fundu durante iha fulan ne'en primeiro nian. Durante Julhu too Setembru, tokon $140 maka hetan transferensia, ho tokon $256 tan iha fulan Outubru too Dezembru, uza hotu RSE. Durante trimestral ba dala tolu no dala haat nian, montante osan iha governu nia tezouru operasaun ne’ebé kaer husi ABP aumenta husi tokon $59 ba tokon $258, indika katak iha deit metade husi transferensia husi Fundu Petroleu mak gasta iha tinan ne’e nia rohan. Balansu iha Fundu Petroleum nian iha tinan 2008 iha $4,196,971,733.

Iha fulan Novembru 2008 nia rohan, Konselhu Ministru aprova Orsamentu Geral Estadu 2009 nian no Parlamento Nasional aprova iha fulan Janeiru 2009. Rendimentu Sustentavel Estimativa (RSE) iha orsamento ida ne’e mak tokon $407.8, no propoin atu gasta hotu hamutuk ho tokon $181.2 aumenta husi Fundu Petroleum nian durante 2009. Liga atu hetan detailhu kona-ba oinsa Ministeriu Finansa halo kalkulasaun ba Rendimentu Sustentavel Estimativa nian ba tinan 2009, no komentariu preliminaria Konselhu Konsultativu Fundu Petroleum nian ba Orsamentu Geral, no analiza husi La'o Hamutuk kona ba prudensia no sustentabilidade kalkulasaun RSE.

Laiha osan ne’ebé maka hasai husi Fundu Petróleu iha trimestral dahuluk 2009, maske osan tokon $200 transfere ona iha trimestral daruak. Balansu iha fulan Marsu 2009 nia rohan, haleno depositu no retornu tuun iha investimentu, maka $4,750,080,475. Haree bá iha rendementu ida bé tuun ne’e, balansu iha fulan Juńu 2009 sa’e uit'oan de’it, ba $4,901,524,889.

Iha Setembro 2009 nia rohan, balansiu iha $5,301,568,442, ho planu atu transfere tokon $207 durante trimestral ba dala tolu ka ba dala hat nian. Iha fulan Novembru foin dadauk, Governu troka sira nia hanoin, husu ba ABP atu transfere montante tomak husi tokon $312 durante trimestral ba dala hat, ne’ebé halo tiha ona. Tokon $512 transfere ona durante 2009, as liu tokon $104 ba Rendimentu Sustentavel Estimativa ne'ebe mak tokon $408. Maske ida ne’e hetan ona autorizasaun husi Orsamento Jeral Estadu 2009 nian, maibe ida ne’e labele mosu hodi hatudu katak iha nesesariu atu finansia programa iha orsamento nian.

Iha tinan 2009 nia rohan balansiu iha Fundu Petroleum nian $5,376,625,558. Aumenta deit tokon $76 durante trimestral ikus ne’e, menus liu kompara ho metade husi aumenta iha trimestral sira, molok trimestral ikus ne’e iha istoria Fundu nian.Iha fulan Dezembru nia rohan, balansu iha Fundu menus liu kompara ho balansiu ne’ebé iha ona fulan Outubru nia rohan, primeira vez mensalmente hetan tuun, tamba foti osan boot liu kompara ho rendimentu petroleum nian. Atu hateten katak, investimentu Fundu nian lakon liu tokon $5 durante trimestral ba dala hat iha tinan 2009, hare ba valor merkadu ne’ebé tun. Iha tinan 2009 tomak, retornu investimentu fundu nian iha deit 0.6% dook liu iha 3% nia okos (iha inflasaun nia leten) ba ida ne’ebé formula Rendimentu Sustentavel Estimativa nian bazeia ba.

Durante fulan tolu dahukuk tinan 2010, investimentu Fundu nian la'o diak liu uituan, no Governu foti tokon $100 tan.. Iha fulan Marsu nia rohan, balansu iha Fundu mak $5,787,178,000. Diskusaun hahu ona kona-ba bele ka la'e no oinsa atu diversifika investimentu Fundu Petroleu, no Ministeriu Finansas atu proposta revisaun ba Lei Fundu Petroleu iha tempu tuir mai iha tinan ida ne'e nia laran.

Relatoriu

ABP iha obrigasaun atu publika relatoriu kona-ba Fundu Petroleum nian loron 40 depois iha fim de kada fulan tolu (kada trimestral). ABP mos tenke hatoo komunikadu imprensa kada fulan tolu nian. La'o Hamutuk hakerek komentariu kona-ba relatoriu primeiru nian iha ami nia Buletin Dezembru 2005 no publika ho artigu ida ne’ebé komprehensivu liu kona-ba Fundu iha Buletin fulan Marsu 2007. Ami nia Buletin fulan Novembru 2008 mos koalia kona ba asuntu sira ne’ebé iha relasaun ho Fundu Petroleum no Orsamentu Estadu. Ami mos halo diskusaun kona-ba Fundu Petroleum nian iha ami nia Programa Radio Igualidade ho ita nia lian tetum iha fulan Marsu 2009.

Komesa hosi 2008, Sekretariu Estadu Rekursu Naturais publika relatoriu annual ida husi Inisiativa Transparensia ba Industria Extrativa ka EITI, kona-ba osan ne’ebé simu husi kompania minarai sira durante tinan kotuk, bele hetan iha tabela iha okos.

Desde fulan Julhu 2009, ABP publika sai relatoriu mensal kona-ba investimentu Fundu Petroleum nian iha sira nia website: www.bancocentral.tl/PF/Reports.asp

Most petroleum revenues Timor-Leste earns at present come from Bayu-Undan in the Joint Petroleum Development Area established by the Timor Sea Treaty. This is managed by the National Petroleum Authority (formerly the Timor Sea Designated Authority), which publishes monthly revenue and other information at http://www.anp-tl.org/pwyp.html. The Petroleum Fund Quarterly Reports aggregate income to the Fund as "taxpayer receipts," including these payments from the NPA/TSDA as well as payments by companies directly to the RDTL government.

On 25 June 2009, the BPA and Ministry of Finances announced (also Tetum) that the Geneva-based Bank for International Settlements (BIS) was being given responsibility to manage investment of  one billion of the approximately five billion dollars in the Petroleum Fund, and $1 billion was transferred to the BIS. The Ministry of Finance and the BPA have instructed BIS to invest 80% of this billion in U.S. government bonds, while investing 20% in government bonds from other countries and currencies, including Australia, Japan, Euro and Pounds Sterling. Details are described in Annex 1 of the new Management Agreement, and also discussed in the June 2009 Quarterly Report.

In the State Budget for 2010, Parliament approved the Government's plan to withdraw $502 million from the Petroleum Fund. During the Budget debate, La'o Hamutuk expressed concerns that this may be too much.  After learning of the Government's plan to exceed the ESI during 2009, La'o Hamutuk wrote a letter to Parliament (also Tetum) on 10 November 2009.

In June 2010, the Government proposed a mid-year budget adjustment to Parliament, increasing Fund withdrawals for the year to $811 million in 2010, $309 million above the ESI. La'o Hamutuk's submission discusses this attempt to undercut the foundational principles of the Petroleum Fund.

Iha loron 25 Juńu 2009, Banku Sentrál (ABP) no Ministériu Finansa fó sai (iha Ingles mós) katak Banku Pagamentu/Settlement Internasionál (BIS) ne’ebe base Zenebra hetan ona responsabilidade atu jére investimentu osan biliaun $1 husi maiz-menus osan biliaun $5 iha Fundu Pertróleu no biliaun ida haruka tiha ona ba sira. Ministériu Finansa no ABP hateten ona ba BIS atu investe 80% husi osan biliaun ida ne’e ba iha titulu governu E.U.A, nomós investe 20% iha titulu governu no moeda husi nasaun sira seluk, hanesan Austrália, Japaun, Euro no Pounds Sterling. Detaillu liu-tan deskreve iha Anexu 1 husi  Akordu Jestaun foun no koalia mós iha Relatóriu Trimestral husi fulan Juńu 2009.

Iha proposta Orsamento Estadu 2010 nian, Ministeriu Finansa iha planu atu foti osan tokon $502 husi Fundu Petroleum, maibe La’o Hamutuk hato’o nia preokupasaun katak ida ne’e dala ruma barak liu. Depois estuda planu Governu nian atu foti liu estimatizasaun rendimentu sustentavel nian durante 2009, La'o Hamutuk hakerek karta ida ba Parlamento iha loron 10 fulan Novembru.

Iha Junho 2010, Governu proposta Orsamentu Rektifikativu tinan klaran nian ba Parlementu, hodi foti tan fundu ba tinan 2010 nian to’o tokon $ 811, tokon $309 barak liu Rendimentu Sustentável Estimativa. Submisaun La’o Hamutuk nian koalia kona ba tentasaun ida ne’e atu halo fraku Fundu Petroleu nia principiu fundamental sira.