Uganda Govt Approves Sale of Heritage's Ugandan Assets
Heritage Oil updated on Heritage Oil & Gas Limited's (HOGL) disposal of its entire interests in Block 1 and Block 3A in Uganda.
- The Government of the Republic of Uganda has provided conditional consent for the disposal of the Assets in Uganda
- The transaction is expected to complete within five working days following finalization with Government of a mechanism, including arbitration, for dealing with any taxes lawfully payable from the disposal of the Assets
- Heritage has received advice that the disposal of the Assets is not taxable in Uganda
- On completion of the transaction Heritage will receive US $1.35 billion in cash from Tullow Uganda Limited, with deferred consideration of up to US $150 million in cash or an interest in a mutually agreed asset
- Following completion of the transaction Heritage will provide an update on the proposed dividend
In accordance with the Petroleum Exploration and Production Act Cap 150, Mr. Hilary Onek, Minister of Energy & Mineral Development, has given consent to Heritage's disposal of the Assets. This consent is conditional on HOGL demonstrating to Government that it will pay any taxes on demand which may arise from the disposal of the Assets.
In a separate letter Mr. Kabagambe-Kaliisa, Permanent Secretary to the Ministry of Energy & Mineral Development, advised that if HOGL was to resolve the tax matter by arbitration in London, then such arbitration would be on the basis that HOGL deposit approximately US $121.5 million, representing 30% of the disputed amount of US $404,925,000 with the Uganda Revenue Authority and provide a bank guarantee for the balance. As announced on June 17, 2010 Heritage previously proposed to Government the option of arbitration in London.
Heritage's position, based on comprehensive advice from leading tax experts in Uganda, the United Kingdom and North America, is that the disposal of the Assets is not taxable in Uganda. Heritage is considering Government's response and will update the market in due course.