Today, the agreement published between Tullow, Total and CNOOC made a Sale and Purchase Agreement (SPA) on Area 1 and Area 2 in the Lake Albert Basin in the Republic of Uganda. That deal was issued on the 30th August 2016.
Now, nearly three years later. Tullow Oil has now back-tracked and said the deal didn’t go through. Surely the SPA and the Joint Venture Agreement wasn’t settled properly. If not, then the press release of Tullow wouldn’t say this:
“Tullow Oil plc (“Tullow”) announces it has been informed that its farm-down to Total and CNOOC will terminate at the end of today, 29 August 2019, following the expiry of the Sale and Purchase Agreements (SPAs)” (…) “The termination of this transaction is a result of being unable to agree all aspects of the tax treatment of the transaction with the Government of Uganda which was a condition to completing the SPAs. While Tullow’s capital gains tax position had been agreed as per the Group’s disclosure in its 2018 Full Year Results, the Ugandan Revenue Authority and the Joint Venture Partners could not agree on the availability of tax relief for the consideration to be paid by Total and CNOOC as buyers” (…) “Tullow will now initiate a new sales process to reduce its 33.33% Operated stake in the Lake Albert project which has over 1.5 billion barrels of discovered recoverable resources and is expected to produce over 230,000 bopd at peak production” (Tullow Oil plc – ‘Termination of farm-down agreement with Total and CNOOC in Uganda’ 29.08.2019).
This deal fell through because the companies didn’t want to compensate each other for back-taxes or the taxation of the possible profits to the Government of Uganda. Something that was approved upon the Joint Venture Agreement in August 2016 with Total and CNOOC.
This shows how hard it is start-up and the issues by operating in Uganda. Even Tullow Oil plc is trying to figure this one out. It was only in January 2017, when the Total was supposed to buy the biggest part of operated stake of 21,5% from Tullow. Surely, with the announcement in 2018 and now in 2019. This has all backfired and stopped, because URA and the companies couldn’t agree on their fees.
That dispute is the one that was interconnected with the “Presidential Handshake” of 2017. As the 6 billions shillings was doled around to civil servants and high ranking officials, who secure the capital tax gain from Heritage/Tullow Oil, which was awarded in February 2015.
Therefore, Tullow has to now find new buyers for their USD $167m stake in the Lake Albert Basin. This would be the payment of the Capital Gain Taxes (Awarded $157 Million) to the Uganda Revenue Authority. Apparently, Total and CNOOC didn’t want to do that apparently.
So from August 2016 to August 2019, the three companies and URA couldn’t come to an agreement on Capital Tax Gain, which Tullow owe URA after losing their case in February 2015. This shows, that the big victory of the state in this matter. Is actually making it harder to find someone who can afford or see it feasible to drill for oil in Area 1 and Area 2.
This is how it seems and the two other companies didn’t want to pay for what Tullow did before them. Peace.
Well, this last few days has been revealing, as the state have added more measures to try to wheel in the economy, but if it will stick boils down to one important factor. That important factor is if the public, the citizens and the stakeholders trust the government and their policies.
This is the key with relaunch of the ghost currency, the decade long missing Zimbabwe Dollar, the joining currency floated after Bond-Notes and RTGS Dollars. Which is supposed to save the economy and bring a new normal. In an economy where there are spiralling prices, lack of imports and also lack of trust in general; this is not directly strengthening that, but surely is a test.
If the Second Republic and the second regime under Zimbabwe African National Union – Patriotic Front (Zanu-PF) is to stick around, they need to fix this. They cannot have another crash, have another big blow and weakening economy. There is already plenty of issues as is, last years taxes on mobile money and transactions took out lots of funds from the economy in direct taxations; these funds have been taken by the state and never returned to the market.
With this in mind, the state is in dire need of change, to build up self-esteem and hope for a better future. However, is the launch of the Zim Dollar, the right thing to do?
Is it about right to monopolize all buying of maize to the Grain Marketing Board, where the public is not allowed to sell or transport even a set amount of maize without licence or without authorities authorizing the transport of the maize?
Will these things make the economy stronger or will they have a negative effect like the RTGS taxes of last year?
I am thinking so, because there is very little evident of good hopes on the horizon, of possible unique changes or patterns, which the state will benefit in huge quotas from this. By all means the ZANU-PF will say it is making progress, that its all good, but not long ago there was fuel shortage and other things lacking because of lack of foreign exchange. The Reserve Bank and the other authorities better be prepared and have good advice for these changes. If they want to revive the currency, they better have a gold standard, a reach and not print money like there is no tomorrow. Since, it doesn’t take much to devalue a currency and also get hyper-inflation. Especially, when the society, the financial institutions and the whole market are sceptical about the whole deal.
The Zim Dollar and the GMB might be good ideas, might be brought to the market by good means, but will only bring more pain or suffering. As the farmers, the traders and the citizens will bear the costs, as the state is figuring out new ways to control and secure funding without adding investment or collateral for these investments. Certainly we can hope for otherwise, that the Finance Minister and everyone else involve has a well functioning plan.
However, do we really think so? Do the ZANU-PF deserve this trust and the good faith? Do they? Alternatively, are they just another military junta finding new ways of scheming for funds? Because, that wouldn’t shock anyone of us. If they are making new commissions or inquiry boards to settle old sins and hire cronies. That is what they do and not really making progress.
We can lie to ourselves and say it will all get better with these measures, but are we really certain? Do they really do all good? Does the ban of foreign currency really help? When the state functions are still taking US Dollars for functions and expecting foreigners to pay in US dollars. Do the RBZ and the Ministry really configure this or are they winging it?
There was one fella, who called the Zimbabwean economy an albatross; I think he was right, I really think he was right. By all accounts, there is little luck and little positive to find. We can joke around, mock and make a fuzz. However, the dire consequences are that teachers cannot food; the civil servants cannot pay for mortgages and so on. It is a dire need for change and for trust in the economy. Nevertheless, as long as the ZANU-PF is playing along, there will be questions. Many, unanswered, which is bringing no good. Even when the measure might have been made with grandest intent. Peace.
“Recently government introduced a small amount of money as OTT but everybody went in arms about a small penny. Everybody is complaining and the moment you introduce a small tax, the entire country is in arms and runs to demonstrate. Where do you want government to get money from, Ugandans should get away from the culture of blaming everything on government. If you want better services, someone has to pay for them through taxes. The better schools, hospitals and roads all come because of the taxes you pay” – State Minister for Foreign Affairs, Hon. Henry Okello Oryem
Hon. Oryem, the State Minister have defended the government for issuing new taxes and expenses on its citizens. As this is happening, all bigger infrastructure projects are taken with foreign donations or loans. The state is loaning more and more funds, the devolution and the expensive growth of Local Government combined with ever growing State Security or Defence Operations makes the state bloated. Plus you have the open bazaar, grand corruption and lack of service delivery. Therefore, the Minister should be a bit more careful to defend the actions of the state.
Oryem, the National Resistance Movement are more careful to pay off needed people for their loyalty, than actually deliver state functions. That is why the Parliament are steadily occupied with getting new loans for infrastructure or even basic services. There Health Care is depleted and that is why the MPs and VIPs cannot get treatment in the Republic, but have to transfer to India, Kenya or South Africa. That is what the big-men does, because know the Hospitals aren’t all good.
That is why Oryem should be a bit more silent and not expect people to be happy for paying taxes. As the people have to cover, to fix and pay school-fees, pay higher for Mobile Money and spend more on basic commodities. Not like they are getting better services, just more expensive. The state is already mismanaging such vast amounts of money and paying ghosts too. There are teachers who hasn’t been paid for months and using energy on side-projects to make a living. Therefore, the State Minister should look into that. As the budgets are as big as light-bulbs for schools, which was built during the time of Idi Amin. Not like the NRM have used fortunes on keeping the Universal Primary Education a float.
Oryem should look into this and maybe even check more closely how the little taxes is spent in the Republic. Because, the misuse, the corruption and the growing debt is a signal of mismanagement, which again is a reason why people don’t like pay taxes. That is all within reason. The only thing that really working is the monitoring and the facilitation of tear-gas, live-bullets and arresting of opposition politicians. Peace.
“Members of Parliament have increased their allowances by 39 per cent and that of parliamentary staff by 15 per cent, citing rising costs of living.” (Yasiin Mugerwa – ‘MPs raise their allowances by 40%’ 26.04.2019, link: https://www.monitor.co.ug/News/National/MPs-raise-their-allowances-40-/688334-5088588-jg82dn/index.html)
There are a big chance you can meet some Very Important People (VIP) or Members of Parliament if you may. They are so special and unique, that they should have high over heels raise. Even when the budgets are already in deficit and every project between here and the moon is paid either on loans, domestic or from international entities.
Still this MPs can afford to give themselves favourable treatment, huge salaries, entitlements and pay, as the government institutions, civil servants lack salaries and general upkeep is on the down-low. Even with all that, it is still cool to get a raise.
The lawmakers who themselves secure a hefty portion of the spoils, while not delivering anything substantial to the citizens who they are supposed to govern over. No they are just hassle and a hefty mess. The MPs doesn’t have to bother with them, unless it is an election and they have to smooch the crowds.
If you believed they had the best interest of the people at heart. They would be more than content with their earnings. Alas, they are greedy and expect to be royal kings, just like the Executive, the President who lives lavish and large on the state. They are just learning from the top and he accepts this. As he knows they can be bought to follow his guidelines and his rule.
The National Resistance Movement, the ruling party are clearly showing their motives for ruling. It is eating, and eating by any means. Not sparing the cost or the thought of the price of it. It is all okay and nothing is to huge. Its cool, it is grand and surely the people can cough up the dough, because they deserve it.
This are the men, the people who are ruling, the ones who doesn’t care or just exposes their narrow-minded approach to life. Not considering the implications, the price or the deficit, not thinking of the loans, nor the possible overspending of the state. No, just thinking about your own pocket and move-on.
From now on. If you’re a teacher, the word MP equals to Greed. Even Greedy guts or buffoons, whose only sole purpose is to eat and blindly following the submissions of Bosco. Peace.