Tullow Oil plc has agreed to settle the outstanding Capital Gains Tax (CGT) bill to the government of Uganda and it’s Tax regulatory body Uganda Revenue Authority (URA) after a long standing tax rift.
According to an official statement from Tullow Oil, one of the leading players in Uganda’s Oil and gas sector, the company said it had agreed to pay $250 million in full and final settlement of its CGT liability.
The statement notes that the payment will comprise of $142 million that was paid in 2012 and $108 million to be paid in three equal installments of $36 million.
“The first of these was paid upon settlement and the remainder will be paid in 2016 and 2017,” the statement read.
Tullow challenged the URA’s assessment of $473 million in CGT after the Multinational sold three of exploration blocks to France’s Total and the China National Offshore Oil Corporation (CNOOC). It appealed against the assessment before the Uganda Tax Appeals Tribunal (TAT).
However, in July 2014, the TAT rejected Tullow’s appeal and assessed Tullow’s CGT liability for the farm-downs at $407. The company later appealed to a the high court in Uganda seeking a fairer assessment.
Commenting on the development, Tullow’s Chief Executive Aiden Heavy said the move is a step in a right direction as the company looks at affirming its self in Uganda’s Oil and gas sector. Heavey welcomed Uganda’s latest move to loosening its tax regime.
“The settlement of this long-running dispute is good news for Tullow and Uganda. In recent months, the Government of Uganda has proposed welcome and necessary changes to its tax regime for oil and gas investments which it is hoped will enable substantive progress to be made towards the sanction of the Lake Albert oil development.” noted Aidan heavey.
Tullow is currently managing interests in over 150 licenses across 25 countries with 67 producing fields. According to wikipedia, the company in 2012 produced on average 79,200 barrels of oil equivalent per day. Its largest activities are in Africa and the Atlantic Margins, where it has discovered new oil provinces in Ghana, Uganda, Kenya and French Guiana.