Tullow Oil has been forced to cancel a $900m deal to sell a significant stake in an oil project in East Africa to Total of France and China’s Cnooc after the parties failed to resolve a tax dispute with the Ugandan government.
Shares in the London-listed oil explorer were recently down 3.5 per cent after it said it had been unable to agree a further extension to the deal, originally struck in January 2017, that would have allowed it to reduce its holding in the undeveloped Lake Albert project from 33 per cent to 11 per cent.
The project is expected to produce 230,000 barrels of oil per day at its peak, once developed. Total and Cnooc are already partners in the project — each owning a third — but had both sought to raise their respective holdings by about 11 per cent to more than 44 per cent via the complex agreement, to which Tullow had been seeking an extension in order to settle the tax dispute.
In a statement issued mid-morning in London, Tullow said it would now have to start a new sales process to reduce its holding in Lake Albert, after it had been unable to secure an extension from its joint venture partners despite previous delays having been approved.
Tullow is operator of the project, meaning it has overall responsibility. While Tullow had come to an agreement with Ugandan tax authorities about its own capital gains tax liabilities, it said there were still unresolved issues around “the availability of tax relief for the consideration to be paid by Total and Cnooc as buyers”. Paul McDade, chief executive of Tullow Oil, said the lapse of the deal was “disappointing”.
“Tullow has worked tirelessly over the last two and a half years to complete this farm down which was structured to reinvest the proceeds in Uganda. Whilst this is a very attractive low-cost development project, we remain committed to reducing our operated equity stake,” Mr McDade added.
The partners had been hoping to make a final investment decision on the project in the second half of this year but Tullow warned in its statement that the lapse of the deal would likely lead to further delays in developing it. Under the terms of the 2017 agreement, Tullow would have received $100m upon completion, $50m when the final investment decision was made and $50m when the first oil was produced. The remainder would have funded its own costs towards developing the project.
I will pursue Bank of Uganda to the end; if I die, my son will take over- Dr. Sudhir vows
“Nobody has been in the past been able to win Central Bank – they have stolen 7 different banks and not accounted to any shareholder and this is the unfortunate part of the whole scenario. You take somebody’s assets, you steal it, you profit from it and you don’t account for it; this is so ridiculous! Then, they sued for $100 Million; the money they stole, they are suing me for it. How?” he wondered.
Pictorial: How Meera Investments is changing Kampala’s skyline
Today, Meera Investments, the property development arm of the Ruparelia Group officially inaugurates their Electrical Plaza, the latest addition to their mixed use building portfolio in the city centre.
Since 1994, Meera has been part of a number of innovative property solutions in mainly, the commercial and residential space and today owns sectors and to date owns over 300 properties in Kampala and other major towns like Mukono, Jinja, Mbale and Mbarara.
The company, according to its Chairman and founder, Dr. Sudhir Ruparelia, is the largest developer of commercial and residential properties and also owns the largest number of ongoing real estate projects. It is also the largest private owner of commercial land in Kampala.
Meera Investments Limited was in 2017/18 rated as a top rental income taxpayer by Uganda Revenue Authority (URA) while Dr. Sudhir Ruparelia, the Chairman/Managing Director of Meera Investments, was rated the second biggest individual rental income taxpayer.
Over the last 3-4 years, the company has been on a construction spree, raising several properties across Kampala, which have both redefined city architecture and changed both Kampala’s skyline, as well as the look and feel of the Kampala City.
Today, we revisit and review some of those projects, especially those developed over the last 3-4 years
“The development of SGR isn’t behind schedule at all as far as harmonization agreement is concerned,” Says Coordinator
” The Standard Gauge Railway was adopted in 2014, by the East Africa Presidents who launched the multitrillion project meant to modernise the traditional railway transport system geared towards boosting economic growth by facilitating a faster movement of goods across borders. “
The SGR Coordinator, Canon Perez Wamburu while appearing before the Public Accounts Committee yesterday to respond to audit queries raised in the 2017/2018 audit report that raised concerns over the delays in implementation of the perceived regional railway, he affirmed that Uganda is on schedule for the construction despite compensating only 11% compensation of the project affected persons within three years.
His remarks were in response to a call by some MPs like Theodore Ssekikuubo (Lwemiyaga County) who questioned why taxpayers have to continue funding the team in charge of SGR yet no single kilometer of the railway has been constructed, five years from the time it was launched in 2014.
Ssekikuubo said, “We are incurring nugatory expenditure on this white elephant. Is it about time we launched the standard gauge railway. After a decade of the launch, not even one kilometer has been put on ground. Kenya has already started on its side, ours was launched at a hotel in Munyonyo, it has remained there, dead and buried there unless the contrary is proved, are we as a country right to continue appropriating money to a non-starting project.”
In response, Wamburu said, “We agreed that Kenya and Uganda arrive at Malaba at the same time. The development of SGR isn’t behind schedule at all as far as harmonization agreement is concerned. Uganda SGR isn’t late at all.”
The Standard Gauge Railway was adopted in 2014, by the East Africa Presidents who launched the multitrillion project meant to modernise the traditional railway transport system geared towards boosting economic growth by facilitating a faster movement of goods across borders.
President Uhuru Kenyatta of Kenya flagged off the maiden passenger train on the newly completed Mombasa-Nairobi SGR in March 2017 and although Uganda had promised to start construction in June 2015, but three years down the road, Government is yet to complete funding negotiations with Exim Bank China.
On Uganda’s side, project is to cost USD2.8Bn approximately, of this, Exim Bank will bring on board USD2.3Bn which represents 85%, while the remaining 15% will be footed by Ugandan tax payers.
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