The Petroleum Fund law was passed on Monday with 68 votes in favour, none against and no abstentions – the first time that any proposed law has been passed unanimously by the National Parliament.

Prime Minister Mari Alkatiri said the result showed that members of parliament from all political parties understood sound management of Timor-Leste’s petroleum revenues was critical to the nation’s future.

“All political parties and members of Parliament carefully considered the Government’s proposal and came to the conclusion that it is the best model for managing the nation’s petroleum receipts for the benefit of this generation and those in the future,” Alkatiri said.

“Achieving community consensus on the management of our petroleum revenue is critically important to the future of our nation.”

Based on Norway’s Petroleum Fund, the fund will receive all petroleum receipts, as well as the return on the fund’s investments. The assets will initially be invested in low-risk US government bonds.

The East Timor government can make withdrawals from the fund to fill any shortfall in the Budget, but this requires parliamentary approval. In making this request, the government must submit a report on the estimated sustainable income (ESI) of the fund. This is the amount that can be spent in any year without undermining the amount that can be spent by future generations.

In addition, the government has adopted a savings/expenditure policy of maintaining the real value of the petroleum wealth, which will serve as a reference to determine the amount of money that should flow out of the fund over time.

This policy translates to spending the ESI – the amount that can be spent each year forever and can therefore be said to strike a good balance between the interests of current and future generations.

The fund will been overseen by a consultative council made up of eminent persons and is scheduled to come into being on July 1.