TULLOW Oil has paid $469m into Bank of Uganda as capital gains tax from the sale of petroleum assets in blocks 1 and 3A in Lake Albert Basin.
Capital gains tax is levied on profit made from an asset sale. The money is from the sale of the blocks by Heritage Oil to Tullow.
“It is a done deal,” Aston Kajara, the state minister for finance in charge of investment, said yesterday.
“The money was wired to Bank of Uganda on Friday, but you can confirm with them (Central Bank) for details.”
Elliot Mwebya, the Central Bank’s director of communications, confirmed receipt of the money. “The money came in last week.”
The payment marks the end of a protracted tax dispute created by Tullow and Heritage last year after the two exploration firms sealed a $1.5b deal without approval.
But the Uganda Revenue Authority (URA) demanded Tullow to pay the capital gains tax liability left behind by Heritage when it disposed off its interests last year.
Heritage disputes the tax assessment, but deposited $121m to Bank of Uganda’s account and the balance was deposited in an escrow account in London, pending resolution in the International Court of Arbitration.
This means that Tullow can go ahead and sell 66.6% of its interest to China’s National Offshore Oil Corporation (CNOOC) and France’s Total for $2.9b.
This transaction is also subject to a $472.7m capital gains tax, which Tullow has promised to pay in five weeks when CNOOC and Total deal is complete.
Honey Malinga, the assistant commissioner in the petroleum exploration and mineral development, said yesterday his department had issued an extension licence for blocks 1 and 3A to compensate for time lost.
“We have granted them an interim operatorship for six months, considering the much needed capitalisation and investments. This is a huge achievement in the development of the oil and gas sector.”
The International Monetary Fund has welcomed Uganda’s plan to handle petroleum revenues, saying it is ‘sensible’ and promotes transparency and accountability.