Tullow Oil plc (Tullow) shareholders have approved its sale of the interest in Uganda’s oil industry removing one of the hurdles for the transaction to be concluded.
In April 2020, the company said that it had signed a deal to sell all its stake in the Lake Albert project to France’s Total for $575million (approximately Shs2.1trillion.)
The oil giant needed a simple majority vote to move ahead with the transaction which will see it entirely exiting Uganda.
Tullow said yesterday (Wednesday) that 99.9 per cent of its stakeholders had voted for the transaction that will see all its interests in Uganda’s oil industry be taken over by the French oil giant Total E&P.
Tullow will be paid $500 million payable at completion and $75 million payable after the project’s Final Investment Decision (FID).
The announcement breathed new life into Uganda’s oil and gas sector following a long stalemate that had affected the country’s commercial oil production time.
There is a wide agreement that the conclusion of this transaction will open the country’s oil sector, quicken the FDI that will see companies spend actual money in Uganda.
Tullow says the transaction also remains subject to a number of other conditions, including customary government approvals and the execution of a binding tax agreement with the government of Uganda and the Uganda Revenue Authority (URA) that reflects the agreed tax principles previously announced.
Tullow says: “The transaction is expected to complete in the second half of 2020.”
Tanzania wants pipeline construction hastened
Uganda’s oil is key to spurring economic developing in East Africa and its delayed production affects the region.
Speaking in Dar es Salaam during the Uganda-Tanzania business forum organised by traders from across the two countries with the aim of boosting bilateral trade in September 2019, Tanzanian President, John Pombe Magufuli, urged his Ugandan counterpart, President Yoweri Museveni to ensure his tax man (URA) sacrifices some short term tax benefits with the hope of getting long-term benefits from the oil pipeline.
He told him to dissolve URA leadership for delaying the East Africa Crude Oil Pipeline (EACOP) that will start from Buseruka Sub-county in Hoima District to the port of Tanga in Tanzania on the Indian Ocean.
He said that the delay in executing the pipeline which would be the longest was costing the country in revenue adding that in support of the project, Tanzania had to come up with some legislations in parliament to waive off certain taxes and levies.
Mr Magufuli said that bureaucrats at most times do not mid about the pains of the ordinary people, the reason why he does not hesitate to fire those who stand in his way to bring development to the Tanzanian people.
However, the tax misunderstanding between URA and the oil company was solved.
He had wanted the project to be named the Kaguta Oil Pipeline.
According to Mr Magufuli, once the pipeline is constructed, Uganda’s revenue collection shall improve making it one of the best economies in Africa.