RE: Ugandan Deal News8 Apr 2020 13:17
Details of the new sale and purchase agreements are still highly guarded. However, industry insiders revealed “progress and a deal being reached” following the recent visit of the Total Group chief executive and board chair, Patrick Pouyanné.
The initial farm-down deal, valued at $900m, collapsed in August 2019 after the joint venture partners failed to get clearance from the government. The farm-down was announced in January 2017, with Tullow seeking to sell 21.6% of its 33.3% areas in Exploration Areas 1, 1A, 2 and 3A to its partners.
Sources said that Mr Pouyanné quietly visited the country in early March during the Presidential Investors’ Roundtable at State House, Entebbe, during which he held a meeting with President Museveni.
The meeting was a follow up to Mr Pouyanné’s visit last October when he held a closed-door one-on-one meeting with the president. The March meeting was a “good one and paved a way forward,” said our source, who prefers to remain anonymous.
At last year’s meeting, the two principles agreed to consult their teams and arrive at a harmonised position, which was agreed upon last month.
The contentious issues include the treatment of a capital gains tax worth $185m (Shs673bn) on the transaction payable over a period of 25 years.
The president’s dilemma was to either forego or revise the levy in order to unlock a final investment decision worth about $10bn for Uganda’s oil projects.
The second issue is a disagreement over how much costs the oil firms can recover before paying corporate income tax at the point of oil production; the firms want the government to lift its limit. The more costs the company book, the less tax they will pay.
https://ugbusiness.com/9091/uganda-and-oil-companies-reach-deal-on-tullow-farm-down/amp?__twitter_impression=true
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