A row between the government of Uganda and a British Heritage Oil Company over taxes has deepened with the Uganda Energy and minerals minister insisting that Heritage Oil Company must pay taxes to receive an endorsement from the Uganda government over the sale of its Western Uganda oil wells to Tullow Company.

Uganda oil exploration

Heritage Oil Company signed a sale and purchase agreement in January 2010 with Tullow Oil Company. Under the agreement, Tullow oil will aquire 50 percent of the shares in the Heritage oil Company oil exploration blocks.

Uganda Minister Onek says Heritage Oil Company must pay taxes to enable the people of Uganda benefit from their oil resource.

Heritage Oil company has gone to ahead to petition the Uganda government to the United Nations for arbitration over the tax dispute with the government of Uganda.

According to the Uganda laws, the oil company is supposed to pay 30 percent taxes to the Uganda government.

The deal is worth US dollars 1.5 billion and the Uganda government is expected to get US dollars 108 million representing 30 percent of the total sale.

In his state of the Union address early this month (June 2010), Uganda President, Yoweri Museveni insisted that Heritage Oil Company will have to pay taxes resulting from the sale of the oil wells to the Uganda government.

The row has stalled investments of over US Dollars 10 billion from China’s CNOOC and France’s Total oil companies in drilling, transportation and processing Uganda recently discovered oil.

The row might also delay oil drilling which was expected to start in 2011 risking making Uganda continuously dependant on expensive oil imports to fuel its economy.

By Solomon Akugizibwe, Ultimate Media

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