MPs want details from government on sale of oil wells

Posted Saturday, April 2 2011 at 00:00

Legislators yesterday tasked the government to explain the status of Uganda’s oil and gas wells and reports that Tullow Oil had sold part of the wells to two foreign companies.
The MP for Lwemiyaga County, Mr Theodore Ssekikubo, raised the concern as a matter of national importance and questioned why Tullow Oil had sold the oil wells to China National Offshore Oil Corporation (CNOOC) and Total, a French oil firm, without Parliament’s knowledge.

Not informed
“The wells have been sold by Tullow Oil to a Chinese and French company at $2.9 billion yet we are not in the know. Since we have cabinet ministers represented here, when shall we be availed with copies of the sale agreement?,” Mr Ssekikubo asked.
Mr Henry Banyenzaki, the chairperson of the Parliamentary Forum on Oil and Gas, informed the House that all oil related problems should have been solved if the government had put in place the Oil Revenue Management Bill.

“”How far have you gone in as far as tabling the Bill is concerned,” Mr Banyenzaki asked.
The Parliament Chief Whip, Mr Daudi Migereko, however, saved the situation when he informed the House that the government would give a statement clarifying on the matter.
“I have been directed by the Prime Minister that I contact the Ministry of Energy to come up with a statement on the transaction,” he said.

He said the Energy Minister, Mr Hillary Onek, would on Tuesday give a statement on the status of the oil wells. Tullow Oil is set to challenge the Shs1.1 trillion tax that the government wants from the sale of its interests in Uganda to the CNOOC and Total.

The company on Tuesday, agreed to sell about 67 per cent of its interests in three oil blocks in Uganda for $2.9 billion (Shs6.9 trillion), to the two firms. The government is eyeing $472.7 million (Shs1.1 trillion) as capital gains tax due from the transaction.
Total and CNOOC are coming on board to create a joint venture which will establish a $10 billion refinery by 2015.

Tullow becomes the second oil exploration company to dispute the 30 per cent capital gains tax that is imposed on oil deals by Uganda. In April last year, Heritage Oil and Gas disputed a tax bill of $404 million that government slapped on its $1.45 billion deal after it sold its stake in Blocks 1 and 3A to Tullow oil.