Uganda's Museveni Gives Oil Firms a Month to Consider Deal
Five oil companies involved in the development of oilfields in Uganda's Albertine Graben have been given one month to decide on several government proposals.
Executives from Total E & P, China National Offshore Oil Company and Tullow met with President Yoweri Museveni on October 31 at State House, Entebbe to discuss key issues still hindering a final investment decision.
The Permanent Secretary in the Ministry of Energy and Mineral Development Robert Kasande confirmed attending the meeting and said, "We have given them a month to come back to us."
Sources said that top of the agenda of the meeting was a failure to agree on an assessment by Uganda Revenue Authority of $167 million as due capital gains tax from Tullow's aborted farmdown of 21.5 per cent of its current 33.3 per cent to Total E & P and CNOOC.
The government is said to be against a proposal by Total to cover the difference of $83.5 million to be reclaimed at a later date from Tullow's recoverable costs once the farmdown has been completed.
The other contentious issues include a demand by the joint venture partners to be allowed to recover their costs before payment of taxes.
The government has suggested a formula that puts a cap on recoverable costs each year to allow it recover some taxes.
According to the sources, a reversal of this approach to taxes would not only require a re-amendment of the Income Tax Act, but would also mean that the companies would operate tax free for at least 10 years.
This presents a po....