KAMPALA — Top oil French company Total E&P Uganda has suspended all activities, including tenders on the East Africa Crude Pipeline (EACOP), sending shivers among stakeholders in the Uganda oil industry.
The suspension follows the collapse of the Tullow sale deal where Total and China National Offshore Oil Company (CNOOC) had agreed to buy the former’s interests.
Sources say that all activities had been suspended but Agathe Bruandet, the press attaché for Total E&P Paris, told us “I’m sorry but we can’t comment [on the issue]”.
Total executives have met President Museveni several times in a bid to pace up the industry decisions.
The suspension, which comes days after the layoff of some staff, is significant for the country’s oil industry.
Industry insiders said it could send the whole industry into disarray and/or collapse the industry.
The Energy Ministry has since raised a red flag, ordering Tullow Oil company to pay the accumulated taxes before it can be allowed to sell part of its stake to Total E&P and CNOOC Uganda.
Mr. Robert Kasande the Permanent Secretary ministry of energy last week said that the government’s position is that the assessed tax should be paid in line with the laws of Uganda and tax reliefs be treated in accordance with laws of Uganda.
This has created confusion in the industry with Cnooc laying off some staff in Uganda.
Mr. Kasande said Tullow has plotted to transfer its interest without payment of Capital Gains Tax arising from the sale to CNOOC and Total — with the ministry and Uganda Revenue Authority (URA) insisting that the oil firm must pay up to it $167m (UGX600b) capital gains tax.
Government failed to reach the Final Investment Decision (FID) that would have unlocked the money and made the pipeline and refinery projects kick-off.
With the collapse of the Tullow deal, it is expected that it will even take longer to get the FID signed.
The country expects the actual production of oil in 2023
