Govt frustrating bid to sell our stake - Tullow

Monday July 15 2019

Frustrated. Efforts to dispose 21.57 per cent

Frustrated. Efforts to dispose 21.57 per cent of its stake in Uganda, according to Tullow Oil Plc are being frustrated by endless government negotiations. FILE PHOTO  

By Dorothy Nakaweesi & Christine Kasemiire

Tullow Oil has said efforts to offload a significant stake in its Ugandan operations are being frustrated by endless government negotiations.
Speaking to Bloomberg, an online news agency, Mr Paul McDade, the Tullow chief executive officer, said efforts to offload a 21.57 per cent stake in Ugandan exploration areas to Total SA continue to stall with government persistently failing to give the deal a go-ahead.
“What we put together we thought was in the best interest of all parties, including the government of Uganda. We feel somewhat frustrated [two and half years] later that the efforts on that farm-down structure have been unsuccessful in completing,” he said, noting that they were now looking for alternative ways to get the deal done.
“What we are doing is gently standing back and looking at: Are there other ways to structure the deal?” It’s really just about not continuing just to try and push the same thing,” Mr McDade told Bloomberg.
However, Energy Minister Irene Muloni at the weekend, told Daily Monitor government was not aware of any frustration, wondering who Tullow had complained to.
“… be fair. Tullow complained to who? To you?” she wondered in a brief phone interview, noting she would give a full response after understanding the contents of the alleged frustration.
In February, Cabinet okayed the move for Tullow to sell up to 21.57 per cent of its stake to Total E&P.
In a meeting chaired by President Museveni, Daily Monitor reported then, Cabinet had, according to the Uganda Media Centre deputy executive director, Shaban Bantariza, okayed Tullow’s proposed transfer of interests priced at about Shs3.4 trillion ($900m) in Block 1, 1A, 2 and 3A to Total E&P.
At the close of last year, Ms Muloni told Daily Monitor, government had endorsed Tullow’s desire to sale its assets to Total E&P subject to the payment of $167m (about Shs614b) in Capital Gains Tax.
“On November 21, 2018 I gave conditional consent for this transaction, subject to payment of the tax obligations as assessed by Uganda Revenue Authority (URA),” she said at a briefing about the status of Uganda’s oil sector.
“In principle, we do not have any problem with the arrangement: how they clear up the $167m is something they will have to arrange with URA,” she said.
In the interview with Bloomberg, Mr McDade said negotiations for the sale were now focused on taxes related to the transaction, claiming that whereas Tullow had agreed to the principle terms for its portion of the levies earlier this year, the deal is yet to be finalised.
However, Daily Monitor could not independently verify why the deal had delayed.
Efforts to get a comment from Total E&P were unsuccessful.