Higher oil revenues boost Future Generations Fund

FUTURE generations would now have more money saved for any emergencies as higher oil revenues would be pumped into a key fund.

The Shura Council yesterday unanimously approved amendments to the 2006 Future Generations Fund Set-up Law, which would significantly boost funds for future generations.

Currently, $1 is saved from every barrel of oil exported if the international price is above $40 per barrel.

Under the original government plan, $2 would be saved from every barrel of crude oil exported if the price is above $80 per barrel, and $3 if it shoots up to $120 per barrel or more.

The Shura Council approved Parliament’s proposal to save $1.25 per barrel if oil prices ranged between $50 and $60, $1.50 if they hovered between $60 and $70 and so on, until it reaches $3 – two years after implementing the government plan.

Prices surged on Friday, ending the week at multi-year highs as Russia’s invasion of Ukraine intensified and oil buyers shunned barrels from the world’s second-largest exporter of crude.

Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa had earlier told MPs in writing that the government plan would allow the fund to recover the $450 million taken to help combat Covid-19 in 2020 and significantly increase revenues.

Shura financial and economic affairs committee chairman Khalid Al Maskati said that the current oil price of $118 per barrel would double the savings under the new mechanism.

“Two more dollars up and it could be $3 saved rather than $2, and if the rates continue on such constant basis then the fund would have triple savings per barrel from the current flat $1,” he said.

“The fund’s coffers have stood at $521 million at the end of 2020 and early projections have shown further revenues of $151m last year, which is around 32pc higher savings.

“The government’s plan would trigger an upward savings but Parliament’s proposed detailed saving that will come into effect within two years would mean more money gets pumped in and that would ensure the availability of higher funds in case of emergencies.”

The legislation will now be referred by National Assembly and Parliament Speaker Fouzia Zainal to His Majesty King Hamad for ratification.

Meanwhile, the Shura Council unanimously rejected amendments made originally by them to the same law that could see $1 deducted from exported or locally-sold barrels on the basis it contradicts the agreement on the first legislation.

MPs rejected the move last month.

Source: https://www.gdnonline.com/Details/1035380/Higher-oil-revenues-boost-Future-Generations-Fund