Tuesday August 10 2010

Onek says Heritage oil deal on hold

By Risdel Kasasira

The government has insisted it will not approve the acquisition of Heritage Oil assets by Tullow until all the disputed taxes are paid. Energy minister Hillary Onek said Heritage Oil has not met the conditional agreement of paying full taxes worth $405 million.

“We gave them that ‘no objection’ on condition that they pay the tax and that hasn’t happened,” Eng. Onek told Reuters yesterday. “Heritage hasn’t paid all the taxes, we don’t want these partial payments. We want full payment. So their transaction is incomplete until we get our full taxes.”

Heritage had paid only 30 per cent of the taxes and is proposing arbitration in London but President Museveni has vetoed such an arbitration process as some government technocrats had proposed.

Tullow corporate affairs manager Jimmy Kiberu said yesterday that they completed the acquisition of the assets on July 26 after meeting all the conditions for the transaction as laid down by the government.

“The ownership of these assets has now been transferred to Tullow. However, following recent suggestions that the government may have changed its view of the transaction, Tullow is holding constructive discussions with ministers and officials,” he said.

July 6 meeting
In a meeting on July 6 with both Heritage and Tullow officials, the Ministry of Energy had given partial approval for the transfer of Heritage’s assets to Tullow and a consortium of partners at a cost of over $1.5 billion.

Heritage has already received $1.045 billion from the sale. As part of the deal, a further $121 million, or 30 per cent of the disputed tax amount, has been deposited with the government and $283 million is being held in an escrow account awaiting resolution of the dispute.

If Heritage does not pay the disputed taxes, the government has the right to suspend the deal.But Mr Kiberu said the matter would be solved. “These discussions designed to resolve any issues are on-going,” he said. Finalising the deal will pave the way for Tullow to start a $10 billion project to develop Uganda’s oil reserves and turn the country into a top oil producer.