Geza Ulole
JF-Expert Member
- Oct 31, 2009
- 65,136
- 91,917
[h=2]EAs oil and gas faces grim future as Uganda and Tullow lock horns over tax dispute[/h]By In2EastAfrica Reporter
[h=3]As political leaders and experts gathered in Arusha, Tanzania, last week to confer on the future of the extractive industry in the region, the writing was on the wall regarding the salient issues and potential pitfalls up for discussion.[/h]Environmentalists fervently argued for sustainable development, the politicians a bright future through people-centred resource allocation while the dominant corporates already have their eyes set on lucrative business prospects.
Even when all players claimed to speak on behalf of the common person, no villager was invited to the podium to flag up for discussion their realistic aspirations during the 6th East African Petroleum Conference and Exhibition.
This dichotomy is reminiscent of the unending fable on whether natural resource endowment is a curse or blessing to countries, especially in Africa. Bad examples abound on the continent: Nigerian motorists are challenged to afford fuel the country produces in plenty; in Libya, former President Muammar Ghaddafi used oil proceeds to entrench himself in power for 42 years while unchecked corruption suffocates growth in other mineral-rich nations.
And closer home, the failure by landlocked Uganda to get its oil discovered seven years ago flowing is telling of the hamstrings less spoken about by optimistic, perhaps egocentric, politicians. Ghana struck oil after Uganda, and the West African nation has begun producing, some say because of proactive and transparent governance. UK-firm, Tullow, is one of top companies behind oil discovery and or production efforts in both countries.
Uganda presently boasts of confirmed deposits of 3.5 billion barrels of oil to-date since the initial find in January 2006.
Tullow Oil PLC, China Offshore Oil National Company (CNOOC) and Total SA of France are three companies presently involved in oil & gas exploration in the Albertine Graben region.
Each of the companies holds an equal one-third stake in the oil fields in blocks EA-1, 2 and 3A in mid-western Uganda. In 2010/2011, Tullow temporarily held 100% interest in the oil wells, having bought out London and Toronto-listed Heritage Companys 50% stake at $1.45 billion.
Tax disputes/bribe allegations
Whereas the sale of Heritages assets excited the participation of new players, the process was later to be sullied by allegations that three senior Cabinet ministers received bribes from foreign oil firms aiming to dig into the Uganda market.
Parliament discussed the accusations during an emergency sitting in October 2011, and resolved implicated ministers step aside and imposed a freeze on transactions in the oil sector until all enabling sector laws were enacted as provided for in Ugandas February 2008 National Oil & Gas Policy.
Implicated ministers included former Security Minister Amama Mbabazi (later promoted to Prime Minister), Foreign Affairs Minister Sam Kutesa (whose daughter Charlotte is married to PresidentYoweri Musevenis son Col. Muhoozi Kainerugaba) and then Energy Minister Hillary Onek (now holding Internal Affairs docket).
President Museveni said he has investigated and found allegations of bribe-taking levelled against the false; a separate investigation by Uganda Police concluded that bank transaction documents adduced to pin the ministers were forged and cleared the trio.
None of the implicated ministers never stepped aside as demanded by the House, and Mr Kutesa, who together with two other ministers was facing separate corruption charges around the same time, left office temporarily. He bounced back in a reshuffle last August, sparking public outrage that Musevenis government had lost the spine to sanction his suspected corrupt cronies.
A parallel probe by an ad hoc Parliament committee is underway, and its members plan to fly out to Malta and Saudi Arabia where the alleged Euros 17 million was reportedly wired to accounts the accused ministers held with foreign banks. Tullow and Italian oil giant, Eni SPA, reportedly paid the bribe.
Secondly, Heritage never paid $404 million that the government of Uganda claimed from the Company in capital gains tax on its $1.45 billion sale of stake to Tullow.
Heritage disputed the levy and declined to pay. Because the UK firm bought Heritage, the standoff over tax threatened its business interest in Uganda. Officials say Tullow on behalf of Heritage then paid part of the tax, and deposited the arrears on an escrow account with a bank in London, pending the outcome of on-going arbitration proceedings Tullow initiated in London against Heritage Oil & Gas Company and the Government of Uganda.
So what should Kenya and Tanzania, both high on oil and gas discoveries, learn from neighbour Uganda?
Industry experts say transparency about contracts with oil firms, availability of and public access to information and adequate laws are crucial in affirming citizens confidence and safeguarding the environment beyond the period when the finite resource would be exhausted.
About 1, 200 delegates technocrats, policy makers, service providers and technology geeks from the five East African partner States and beyond are expected to converge at the Arusha International Conference Centre next Wednesday, and thrash out key issues on the regions potential on extractives; their exploration and development and building of technical capacity of local stakeholders to benefit from the resources exploitation.
The theme of the symposium seems apt: East Africa Region The Emerging Destination for Investment and Future Supply of Oil and Gas for Sustainable Development. Leaders will do well comparing notes, not only on the success but inherent challenges.
Sector framework
The Ugandan Parliament in December 2012, after nearly a year of bickering, passed the Upstream Bill, a piece of legislation providing for establishment of a regulatory Authority for oil; a national oil company to manage commercial oil business on behalf of the state; and creation of a directorate to handle licensing and policy issues.
Titled the Petroleum Exploration, Development and Production Bill 2012, the law gives the line minister exclusive powers to negotiate, issue and revoke licence to oil companies. It was controversially passed by Members of Parliament subscribing to the ruling NRM following a protest walk-out by opposition members.
Another related Bill on Petroleum (Refining, Gas Processing, Conversion, Transportation and Storage), tabled in February 2012, is yet to be debated and passed when Parliament reconvenes from recess on February 5, 2013. The proposed law lays ground rules for production, distribution, refinery and sale of oil products. Until it is in place, no oil output is likely.
Production date
State Energy Minister Simon GiuDUjanga says they expect oil production to begin in the next two years.
2015 is our realistic target for production, Mr DUjanga said, adding, the country will be selling oil by 2017 whatever the case. Uganda plans to hold presidential and general elections in 2016, and the timing of oil outflow appears calculated to buoy the incumbent.
But Parliament must first enact the enabling legislation, and political rancour over the resource in the past has shown nothing in the sector is certain.
The production deadline has already been pushed multiple times since 2009.
Uganda government forced Tullow to farm-down to CNOOC and Total to break its brief monopoly after Heritage exited. Officials said they hoped entry of new players would aid mustering of more resources as well as deployment of appropriate technology and expertise to fast-track oil and gas production.
The companys Uganda general manager, Jimmy Mugerwa, said: We are aiming for first oil production approximately three years after the partners have made a final investment decision.
That would be good news for Tullow 185 employees in Uganda, 167 being natives.
Questions about Tullow
Yet neither the government nor the oil companies seems sure or even believable. A standoff over refinery has, according to industry insiders, fractured relations and undermined business confidence between the exploration companies and government, dimming production prospects.
We had hoped that this [Tullow] was a credible and serious company here to do long-term business, but after getting $2.9 billion [during the farm-down to CNOOC and Total], all options are for it on the table, said MP Theodore Ssekikubo, head of the informal Uganda parliamentary forum on Oil & Gas. They can choose to stay or run away after making quick money through the farm-down after which they still retained one-third of the oil fields.
The company declined to disclose figures for its cumulative investments to-date, making it impossible to gauge if its $2.9 billion windfall during the farm-down exceeding its expenditures. And that it could sell its remaining 33% stake and quit is likely, Mr Ssekikubo said.
Refinery a must
Existing disagreements make a sell-out more probable. The oil firms contend that building a refinery to process the countrys waxy oil would not be profitable, and is likely to make related products and byproducts more expensive and uncompetitive regionally.
Uganda government commissioned UKs Foster Wheeler to examine the viability of an inland refinery, and concluded such a plant would help create local jobs, earn extra foreign exchange for the country by placing it in pole position to export high-value processed fuel and byproducts.
President Yoweri Museveni has strongly argued that exporting crude would amount to donating the countrys resources and jobs to outsiders, and he will never allow that to happen.
That barrel of crude you carelessly export contains petroleum, diesel, aviation fuel, paraffin, HFO (for electricity generation, furnace oil), PVC for plastics, bitumen for tarmacking our roads, Mr Museveni said during a December 13, 2012 address to Parliament, justifying the requirement for a refinery. The oil companies, previously opposed to the idea of erecting a refinery, have been silenced by the Executive rant and are keeping their next game plans close to their chest.
It is unclear if Foster Wheeler had appraised different alternatives in handling the oil or only conducted a study tailored to justify refinery construction.
Dickens Kamugisha, chief executive director of Africa Institute for Energy Governance (AFIEGO), a local think tank on extractives, said whereas it is desirable for an oil-endowed country to build refineries, the decision to invest in the plants should be based on long-term commercial and environmental gains and ramifications.
Otherwise, we might sink a lot of money to build a refinery which will become a white elephant project, he noted.
The government aims to construct a refinery with a capacity to process up to 100, 000 barrels of oil per day, according to a re-designed blue-print prepared by the Ministry of Energy and Mineral Development.
It will be modular; daily processing is projected to begin at 60, 000 barrels per day and rise incrementally until full capacity operation.
The Ministry of Energy is reportedly selling a copy of the Foster Wheeler report at $30, 000 and the sale is restricted to prospective investors; making it unaffordable to citizens and other stakeholders. As such, the much-touted favourable findings if they exist remain an exclusive knowledge of a handful of bureaucrats. Yet government has premised its push for a refinery on the reports recommendations.
That one (refinery) is not for debate; its not negotiable, junior Energy Minister DUjanga said, But we are leaving open the option of exporting part of oil in crude form.
Secrecy & dry wells
Official secrecy on deals remains the biggest hazard to Ugandas fledgling oil sector, AFIEGOs Kamugisha said. Citizens are empowered to demand accountability if they have access to information; if there is effective public participation and access to justice, he argued. It is difficult for us (as civil society actors) to know who has been fixing things for these oil companies and the [existing] laws are inadequate [to remedy the situation].
Beside the Foster Wheeler report, government has kept the production sharing agreements it signed with foreign oil firms secret, raising suspicion among stakeholders.
The country has confirmed oil deposits of 3.5 billion barrels, although multiple December 2012 drillings at Riwu-1, RAA-1 and Til-1 areas did not encounter commercial hydrocarbons.
Of the four wildcat exploration drills undertaken last December by Tulloq in an area operated by Total, oil pay was only encountered at Lyec-1 and the finding is under evaluation and re-mapping, according to Tullow and Energy ministry officials.
Tullow staying put
General Manager Mugerwa said significant appraisal drilling activities remain in 2013, and denied the company wants out.
Tullow is not planning to exit Uganda and is committed to Uganda for the long-term, he said.
Bureaucrats and activists speaking about the reported Tullow exit plans have no evidence or credible information to back up their claims. Minister DUjanga said he heard about it from the media and if it [the proposal] is not on our table, we cannot discuss it.
President Museveni in February 2012 directed Energy Minister Irene Muloni to renew Tullows licence in spite of a parliamentary resolution capping deals in the sector until laws to guide the sector are in place.
The Executive hoped the decision, which opened the way for completion of the three-party farm-down on February 21, 2012, would unlock then existing legal gridlock and quicken production plans.
Fresh tax dispute
Instead Tullow on October 31, last year, filed a case at the World Bank-created International Centre for Settlement of Investment Disputes (ICSID), challenging government decision to impose Value Added Tax (VAT) on some of its imports.
The dispute is unrelated to the resolution of tax disputes on various sales of assets in the Republic of Uganda and the proceedings commenced by Tullow Uganda Limited against Heritage Oil and Gas Limited and Heritage Oil Plc in London, the firm said.
Investment and legal analysts say Tullow could quits Uganda if it loses the arbitration case at ICSID.
Tullow may choose the expropriation route if it finds it has little to challenge the right of Uganda to levy taxes as long as these provisions are non-discriminatory in nature and were not passed with the intent to singly punish Tullow or their predecessor in interest, observed KaroliSsemogerere, an Attorney at Law in New York with vast experience in Corporate Law and Corporate Finance.
The London-listed oil company is represented in the Washington D.C. case by UKs Ashurst law firm and the politically well-connected Kampala Associated Advocates in Uganda.
Tullow reportedly lined up former solicitor General Peter Kabatsi and Patrick Bitature, chairman of Uganda Investment Authority, as expert witnesses. A Uganda diplomatic source in New York, however, says Mr Bitature has opted out.
The arbitration case in Washington is under seal, meaning its details are not public.
As a neutral organisation, ICSID does not comment on cases, the centres secretariat said in reply to earlier email enquiries on specifics of Tullows case against Uganda.
According to Mr Kabatsi, now in private legal practice, his colleague Oscar Kambona on behalf ofKampala Associated Advocates is handling the case for Tullow.
Kabatsi served as solicitor general from 1990 to 2002, and said he never negotiated oil contracts and, therefore, sees no conflict of interest being a partner in a law firm representing Tullow. Not at all, he said.
Government has kept details of both arbitration proceedings to itself, and its legal team led by Attorney Peter Nyombi is in London for the first Tullow case.
Deputy Attorney General Fred Ruhindi said he had no information about the status of both cases and that only Mr Nyombi would give an update upon return from the UK.
Both those cases are being handled by the Attorney General himself, he said, They went to London and have not returned.
That secrecy has been a cause of worry, even intense speculation, among Ugandans. The lingering question has been: If there is nothing wrong, why is government hiding information about oil from its citizens?
DUjanga disagrees. Its not secrecy; its confidentiality, the minister said, adding: If you have spent money for [geological] studies and found minerals, you just cant give the information anyhow. You must know if the person seeking information means well or is an enemy.
As a government, we work in the interest of people who elected us and they should have confidence in what we do.
[h=3]As political leaders and experts gathered in Arusha, Tanzania, last week to confer on the future of the extractive industry in the region, the writing was on the wall regarding the salient issues and potential pitfalls up for discussion.[/h]Environmentalists fervently argued for sustainable development, the politicians a bright future through people-centred resource allocation while the dominant corporates already have their eyes set on lucrative business prospects.
Even when all players claimed to speak on behalf of the common person, no villager was invited to the podium to flag up for discussion their realistic aspirations during the 6th East African Petroleum Conference and Exhibition.
This dichotomy is reminiscent of the unending fable on whether natural resource endowment is a curse or blessing to countries, especially in Africa. Bad examples abound on the continent: Nigerian motorists are challenged to afford fuel the country produces in plenty; in Libya, former President Muammar Ghaddafi used oil proceeds to entrench himself in power for 42 years while unchecked corruption suffocates growth in other mineral-rich nations.
And closer home, the failure by landlocked Uganda to get its oil discovered seven years ago flowing is telling of the hamstrings less spoken about by optimistic, perhaps egocentric, politicians. Ghana struck oil after Uganda, and the West African nation has begun producing, some say because of proactive and transparent governance. UK-firm, Tullow, is one of top companies behind oil discovery and or production efforts in both countries.
Uganda presently boasts of confirmed deposits of 3.5 billion barrels of oil to-date since the initial find in January 2006.
Tullow Oil PLC, China Offshore Oil National Company (CNOOC) and Total SA of France are three companies presently involved in oil & gas exploration in the Albertine Graben region.
Each of the companies holds an equal one-third stake in the oil fields in blocks EA-1, 2 and 3A in mid-western Uganda. In 2010/2011, Tullow temporarily held 100% interest in the oil wells, having bought out London and Toronto-listed Heritage Companys 50% stake at $1.45 billion.
Tax disputes/bribe allegations
Whereas the sale of Heritages assets excited the participation of new players, the process was later to be sullied by allegations that three senior Cabinet ministers received bribes from foreign oil firms aiming to dig into the Uganda market.
Parliament discussed the accusations during an emergency sitting in October 2011, and resolved implicated ministers step aside and imposed a freeze on transactions in the oil sector until all enabling sector laws were enacted as provided for in Ugandas February 2008 National Oil & Gas Policy.
Implicated ministers included former Security Minister Amama Mbabazi (later promoted to Prime Minister), Foreign Affairs Minister Sam Kutesa (whose daughter Charlotte is married to PresidentYoweri Musevenis son Col. Muhoozi Kainerugaba) and then Energy Minister Hillary Onek (now holding Internal Affairs docket).
President Museveni said he has investigated and found allegations of bribe-taking levelled against the false; a separate investigation by Uganda Police concluded that bank transaction documents adduced to pin the ministers were forged and cleared the trio.
None of the implicated ministers never stepped aside as demanded by the House, and Mr Kutesa, who together with two other ministers was facing separate corruption charges around the same time, left office temporarily. He bounced back in a reshuffle last August, sparking public outrage that Musevenis government had lost the spine to sanction his suspected corrupt cronies.
A parallel probe by an ad hoc Parliament committee is underway, and its members plan to fly out to Malta and Saudi Arabia where the alleged Euros 17 million was reportedly wired to accounts the accused ministers held with foreign banks. Tullow and Italian oil giant, Eni SPA, reportedly paid the bribe.
Secondly, Heritage never paid $404 million that the government of Uganda claimed from the Company in capital gains tax on its $1.45 billion sale of stake to Tullow.
Heritage disputed the levy and declined to pay. Because the UK firm bought Heritage, the standoff over tax threatened its business interest in Uganda. Officials say Tullow on behalf of Heritage then paid part of the tax, and deposited the arrears on an escrow account with a bank in London, pending the outcome of on-going arbitration proceedings Tullow initiated in London against Heritage Oil & Gas Company and the Government of Uganda.
So what should Kenya and Tanzania, both high on oil and gas discoveries, learn from neighbour Uganda?
Industry experts say transparency about contracts with oil firms, availability of and public access to information and adequate laws are crucial in affirming citizens confidence and safeguarding the environment beyond the period when the finite resource would be exhausted.
About 1, 200 delegates technocrats, policy makers, service providers and technology geeks from the five East African partner States and beyond are expected to converge at the Arusha International Conference Centre next Wednesday, and thrash out key issues on the regions potential on extractives; their exploration and development and building of technical capacity of local stakeholders to benefit from the resources exploitation.
The theme of the symposium seems apt: East Africa Region The Emerging Destination for Investment and Future Supply of Oil and Gas for Sustainable Development. Leaders will do well comparing notes, not only on the success but inherent challenges.
Sector framework
The Ugandan Parliament in December 2012, after nearly a year of bickering, passed the Upstream Bill, a piece of legislation providing for establishment of a regulatory Authority for oil; a national oil company to manage commercial oil business on behalf of the state; and creation of a directorate to handle licensing and policy issues.
Titled the Petroleum Exploration, Development and Production Bill 2012, the law gives the line minister exclusive powers to negotiate, issue and revoke licence to oil companies. It was controversially passed by Members of Parliament subscribing to the ruling NRM following a protest walk-out by opposition members.
Another related Bill on Petroleum (Refining, Gas Processing, Conversion, Transportation and Storage), tabled in February 2012, is yet to be debated and passed when Parliament reconvenes from recess on February 5, 2013. The proposed law lays ground rules for production, distribution, refinery and sale of oil products. Until it is in place, no oil output is likely.
Production date
State Energy Minister Simon GiuDUjanga says they expect oil production to begin in the next two years.
2015 is our realistic target for production, Mr DUjanga said, adding, the country will be selling oil by 2017 whatever the case. Uganda plans to hold presidential and general elections in 2016, and the timing of oil outflow appears calculated to buoy the incumbent.
But Parliament must first enact the enabling legislation, and political rancour over the resource in the past has shown nothing in the sector is certain.
The production deadline has already been pushed multiple times since 2009.
Uganda government forced Tullow to farm-down to CNOOC and Total to break its brief monopoly after Heritage exited. Officials said they hoped entry of new players would aid mustering of more resources as well as deployment of appropriate technology and expertise to fast-track oil and gas production.
The companys Uganda general manager, Jimmy Mugerwa, said: We are aiming for first oil production approximately three years after the partners have made a final investment decision.
That would be good news for Tullow 185 employees in Uganda, 167 being natives.
Questions about Tullow
Yet neither the government nor the oil companies seems sure or even believable. A standoff over refinery has, according to industry insiders, fractured relations and undermined business confidence between the exploration companies and government, dimming production prospects.
We had hoped that this [Tullow] was a credible and serious company here to do long-term business, but after getting $2.9 billion [during the farm-down to CNOOC and Total], all options are for it on the table, said MP Theodore Ssekikubo, head of the informal Uganda parliamentary forum on Oil & Gas. They can choose to stay or run away after making quick money through the farm-down after which they still retained one-third of the oil fields.
The company declined to disclose figures for its cumulative investments to-date, making it impossible to gauge if its $2.9 billion windfall during the farm-down exceeding its expenditures. And that it could sell its remaining 33% stake and quit is likely, Mr Ssekikubo said.
Refinery a must
Existing disagreements make a sell-out more probable. The oil firms contend that building a refinery to process the countrys waxy oil would not be profitable, and is likely to make related products and byproducts more expensive and uncompetitive regionally.
Uganda government commissioned UKs Foster Wheeler to examine the viability of an inland refinery, and concluded such a plant would help create local jobs, earn extra foreign exchange for the country by placing it in pole position to export high-value processed fuel and byproducts.
President Yoweri Museveni has strongly argued that exporting crude would amount to donating the countrys resources and jobs to outsiders, and he will never allow that to happen.
That barrel of crude you carelessly export contains petroleum, diesel, aviation fuel, paraffin, HFO (for electricity generation, furnace oil), PVC for plastics, bitumen for tarmacking our roads, Mr Museveni said during a December 13, 2012 address to Parliament, justifying the requirement for a refinery. The oil companies, previously opposed to the idea of erecting a refinery, have been silenced by the Executive rant and are keeping their next game plans close to their chest.
It is unclear if Foster Wheeler had appraised different alternatives in handling the oil or only conducted a study tailored to justify refinery construction.
Dickens Kamugisha, chief executive director of Africa Institute for Energy Governance (AFIEGO), a local think tank on extractives, said whereas it is desirable for an oil-endowed country to build refineries, the decision to invest in the plants should be based on long-term commercial and environmental gains and ramifications.
Otherwise, we might sink a lot of money to build a refinery which will become a white elephant project, he noted.
The government aims to construct a refinery with a capacity to process up to 100, 000 barrels of oil per day, according to a re-designed blue-print prepared by the Ministry of Energy and Mineral Development.
It will be modular; daily processing is projected to begin at 60, 000 barrels per day and rise incrementally until full capacity operation.
The Ministry of Energy is reportedly selling a copy of the Foster Wheeler report at $30, 000 and the sale is restricted to prospective investors; making it unaffordable to citizens and other stakeholders. As such, the much-touted favourable findings if they exist remain an exclusive knowledge of a handful of bureaucrats. Yet government has premised its push for a refinery on the reports recommendations.
That one (refinery) is not for debate; its not negotiable, junior Energy Minister DUjanga said, But we are leaving open the option of exporting part of oil in crude form.
Secrecy & dry wells
Official secrecy on deals remains the biggest hazard to Ugandas fledgling oil sector, AFIEGOs Kamugisha said. Citizens are empowered to demand accountability if they have access to information; if there is effective public participation and access to justice, he argued. It is difficult for us (as civil society actors) to know who has been fixing things for these oil companies and the [existing] laws are inadequate [to remedy the situation].
Beside the Foster Wheeler report, government has kept the production sharing agreements it signed with foreign oil firms secret, raising suspicion among stakeholders.
The country has confirmed oil deposits of 3.5 billion barrels, although multiple December 2012 drillings at Riwu-1, RAA-1 and Til-1 areas did not encounter commercial hydrocarbons.
Of the four wildcat exploration drills undertaken last December by Tulloq in an area operated by Total, oil pay was only encountered at Lyec-1 and the finding is under evaluation and re-mapping, according to Tullow and Energy ministry officials.
Tullow staying put
General Manager Mugerwa said significant appraisal drilling activities remain in 2013, and denied the company wants out.
Tullow is not planning to exit Uganda and is committed to Uganda for the long-term, he said.
Bureaucrats and activists speaking about the reported Tullow exit plans have no evidence or credible information to back up their claims. Minister DUjanga said he heard about it from the media and if it [the proposal] is not on our table, we cannot discuss it.
President Museveni in February 2012 directed Energy Minister Irene Muloni to renew Tullows licence in spite of a parliamentary resolution capping deals in the sector until laws to guide the sector are in place.
The Executive hoped the decision, which opened the way for completion of the three-party farm-down on February 21, 2012, would unlock then existing legal gridlock and quicken production plans.
Fresh tax dispute
Instead Tullow on October 31, last year, filed a case at the World Bank-created International Centre for Settlement of Investment Disputes (ICSID), challenging government decision to impose Value Added Tax (VAT) on some of its imports.
The dispute is unrelated to the resolution of tax disputes on various sales of assets in the Republic of Uganda and the proceedings commenced by Tullow Uganda Limited against Heritage Oil and Gas Limited and Heritage Oil Plc in London, the firm said.
Investment and legal analysts say Tullow could quits Uganda if it loses the arbitration case at ICSID.
Tullow may choose the expropriation route if it finds it has little to challenge the right of Uganda to levy taxes as long as these provisions are non-discriminatory in nature and were not passed with the intent to singly punish Tullow or their predecessor in interest, observed KaroliSsemogerere, an Attorney at Law in New York with vast experience in Corporate Law and Corporate Finance.
The London-listed oil company is represented in the Washington D.C. case by UKs Ashurst law firm and the politically well-connected Kampala Associated Advocates in Uganda.
Tullow reportedly lined up former solicitor General Peter Kabatsi and Patrick Bitature, chairman of Uganda Investment Authority, as expert witnesses. A Uganda diplomatic source in New York, however, says Mr Bitature has opted out.
The arbitration case in Washington is under seal, meaning its details are not public.
As a neutral organisation, ICSID does not comment on cases, the centres secretariat said in reply to earlier email enquiries on specifics of Tullows case against Uganda.
According to Mr Kabatsi, now in private legal practice, his colleague Oscar Kambona on behalf ofKampala Associated Advocates is handling the case for Tullow.
Kabatsi served as solicitor general from 1990 to 2002, and said he never negotiated oil contracts and, therefore, sees no conflict of interest being a partner in a law firm representing Tullow. Not at all, he said.
Government has kept details of both arbitration proceedings to itself, and its legal team led by Attorney Peter Nyombi is in London for the first Tullow case.
Deputy Attorney General Fred Ruhindi said he had no information about the status of both cases and that only Mr Nyombi would give an update upon return from the UK.
Both those cases are being handled by the Attorney General himself, he said, They went to London and have not returned.
That secrecy has been a cause of worry, even intense speculation, among Ugandans. The lingering question has been: If there is nothing wrong, why is government hiding information about oil from its citizens?
DUjanga disagrees. Its not secrecy; its confidentiality, the minister said, adding: If you have spent money for [geological] studies and found minerals, you just cant give the information anyhow. You must know if the person seeking information means well or is an enemy.
As a government, we work in the interest of people who elected us and they should have confidence in what we do.
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