Committee Reports > List of Committees > Joint > 2006 > Committee on Foreign Affairs > Report No. 04 - Project Timor-Leste

Appendix 1 Petroleum Fund Act Extracts

PETROLEUM FUND LAW (EXTRACTS)

Preamble

This Act establishes a Petroleum Fund which seeks to meet with the constitutional requirement laid down in Article 139 in the Constitution of the Republic. Pursuant to this provision, petroleum resources shall be owned by the State, be used in a fair and equitable manner in accordance with national interests, and the income derived therefrom should lead to the establishment of mandatory financial reserves.

The Petroleum Fund shall contribute to a wise management of the petroleum resources for the benefit of both current and future generations. The Petroleum Fund shall be a tool that contributes to sound fiscal policy, where appropriate consideration and weight is given to the long-term interests of Timor-Leste’s citizens.

Efficient planning and proper execution of public sector budgets are key components of a sound management of the petroleum wealth. The Petroleum Fund is to be coherently integrated into the State Budget, and shall give a good representation of the development of public finances. The Petroleum Fund shall be prudently managed and shall operate in an open and transparent fashion, within the constitutional framework.

This Act lays down the key parameters for the operation and management of the Petroleum Fund. The Act governs the collection of and management of receipts associated with the petroleum wealth, regulates transfers to the State Budget, and provides for Government accountability and oversight of these activities.

Therefore, pursuant to Article 139 of the Constitution and for the purpose of establishing a fund of income from the exploitation of non-renewable petroleum resources for the needs of both current and future generations,

Article 6 -Petroleum Fund Receipts

6.1 The following amounts are Petroleum Fund gross receipts:

(a)the gross revenue, including tax revenue, of Timor-Leste from any petroleum operations, including prospecting or exploration for, and development, exploitation, transportation, sale or export of petroleum, and other activities relating thereto;

(b)any amount received by Timor-Leste from the Designated Authority pursuant to the Treaty;

(c)any amount received by Timor-Leste from the investment of Petroleum Fund receipts;

(d)any amount received from direct or indirect participation of Timor-Leste in petroleum operations; and

(e)any amount received by Timor-Leste relating, directly or indirectly, to petroleum resources not covered in paragraphs (a) to (d) above.

6.2 In the event that Timor-Leste participates in petroleum operations indirectly, as provided for in paragraph (d) of Article 6.1, through a national oil company, the receipts of the Petroleum Fund shall include the following:

(a)any amount payable by the national oil company as tax, royalty or any other due in accordance with Timor-Leste law; and

(b)any amount paid by the national oil company as dividend.

6.3. From the amount received in accordance with Article 6.1, the Central Bank shall be entitled to deduct, by direct debit of the Petroleum Fund account, any reasonable management expenses, as provided for in the operational management agreement referred to in Article 11.3.