one has to wonder how this Kampala correspondent can be so...

one has to wonder how this Kampala correspondent can be so assured that Tullow will start producing Ugandan oil next year since they have been locked out of the Kingfisher field and have had another block taken off them, or so the GofU has told the world recently?
Just how flexible and fluid are the UofG regulatory systems and petroleum permits?
Time will tell!

Dow Jones Newswires.DJ Uganda Lawmakers Block New Legislation To Tax Oil Profits
06 Oct 2010 - 18:17
By Nicolas Bariyo

Special to DOW JONES NEWSWIRES

KAMPALA Uganda -(Dow Jones)- Ugandan legislators Tuesday blocked a bill to enable the government to tax profits from impending oil production in the African nation and to collect taxes if petroleum assets change hands between companies, law makers said Wednesday.

Beatrice Atim Anywar, a Ugandan lawmaker on the Natural Resources committee told Dow Jones Newswires that lawmakers want government to first present the 2010 Petroleum law to regulate the sector before amending taxation laws. The petroleum law would set up a national petroleum ministry and a national oil company in Uganda, which has emerged in the last couple of years on the international petroleum scene.

"Members of parliament are opposed to the presentation of the Income Tax Amendment before the Petroleum Bill," Anywar said, adding that by presenting the Income tax Bill before the Petroleum Bill, the government is attempting to 'put the cart before the horse.'"

The move by the legislature could delay Uganda's efforts to collect taxes on profits from petroleum once Uganda begins pumping oil and gas. Uganda has discovered at least 2 billion barrels of oil in its Lake Albertine Rift, according to Uganda's Ministry of Energy and Minerals Development. The U.K.'s Tullow Oil PLC (TLW.LN) is preparing to start oil production in Uganda by the fourth quarter of 2011.

Edward Ssekandi, the parliamentary speaker, blocked Uganda's junior finance minister Aston Kajara from presenting the 2010 Income Tax Amendment Bill in parliament on Tuesday after several lawmakers raised objections.

Besides taxing profits on oil production, the 2010 Income Tax Amendment Bill would stipulate that a company intending to transfer its interest in a petroleum agreement must pay the taxes in full before the interest is taken over by the new company. Analysts say that this particular provision is targeting transactions in the sector as exploration companies transfer their interests ahead of oil production.

Uganda is embroiled in a tax dispute with London-listed Heritage Oil PLC (HOIL.LN) over a 30% capital gains tax on the $1.45 billion sale of Heritage's assets to Tullow. Uganda has withheld its endorsement of the deal, preventing Tullow from bringing in new partners Total SA (TOT) and China National Offshore Oil Company (CEO). On Wednesday, a Tullow executive told reporters in London that the company is close to resolving a dispute with the Ugandan government.

The proposed income tax wouldn't affect the Heritage dispute, because it isn't retroactive. But the change could strengthen Uganda's hand in future cases.

Uganda's finance ministry wants the bill passed before the end of the third quarter, ahead of Tullow's oil production trial in Block 2, when the U.K. company will be carrying out extended well testing and beginning petroleum production on a trial basis.

According to company officials, Uganda's daily oil output could reach 350,000 barrels by 2018 if the right production plan is adopted. Currently Uganda is expected to produce at least 200,000 barrels of oil a day by 2015.

(James Herron in London contributed to this story.)

-By Nicholas Bariyo, contributing to Dow Jones Newswires; 256-75-2624615 [email protected]


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October 06, 2010 13:17 ET (17:17 GMT)

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