Kampala, Uganda | THE INDEPENDENT | The government of Uganda is working behind the scenes to revive talks in the collapsed oil companies’ deal.
Minister of Finance, Matia Kasaija confirmed that government is pushing to see that oil companies go ahead to conclude their deal, a move that could breathe life into the oil industry again.
Towards the end of last month Tullow Oil terminated a deal in which France’s Total E&P and China National Offshore Oil Company (CNOOC) were to buy 21% of its interest in the Albertine region.
The companies disagreed with government on tax to be paid and whether to grant a tax relief.
Kasaija confirmed on Tuesday evening that government is pushing to see that talks go on but warned that time lost could mean oil production might delay for more two years.
He said Uganda’s dream to get that oil out of the ground is still live and Ugandans should remain hopeful.
Dr Elly Karuhanga, the chairman of the Uganda chambers of mines and petroleum, told URN on Wednesday that he was happy people were working hard behind the scenes to get the talks going.
He said there is need for urgency because a lot is at stake.
The collapse of the talks meant a lot to the Uganda’s oil industry. It meant that the anticipated Final Investment Decision (FID), which would have seen companies release money and resume key projects including the pipeline and refinery, will not be concluded soon.
A week after the collapse of the deal, Total E&P suspended all activities on the $3.5bn pipeline and laid off staff, saying there was no demand for them.
The push for the resumption of the talks is being seen as a silver lining by industry players.
There is a feeling that government might soften on the issue of tax relief to let the companies conclude their deal. Uganda hopes to start oil production by 2023.
Bank of Uganda has warned that any delays beyond 2023 in terms of government getting oil out of the ground could mean it may not be able service its debts.