Page 6 - DMEA Week 37 2021

DMEA POLICY & SECURITY DMEA

Ugandan government

draws up EACOP tax bill

AFRICA UGANDA’S government has finished drafting were based in Uganda, thereby ensuring that
a law designed to establish a fixed legal frame- most of its payments are made to the Ugandan
work for taxation of the East Africa Crude Oil government.
Pipeline (EACOP), the link that will be built to The draft bill also outlines the tax benefits that
pump crude from fields near Lake Albert to the Ugandan authorities have granted to the EACOP
Tanzanian coast. project, including a temporary exemption from
According to a report from the Observer, corporate income tax and a permanent exemp-
members of the cabinet approved the tax bill tion from customs duties on imported goods.
last week and are now preparing to submit it to Additionally, it describes the local content rules
Parliament. They have not said when they expect that the holding company must follow and tasks
to take this step or when legislators might begin the Petroleum Authority of Uganda (PAU) with
debating the measure. monitoring compliance.
The bill aims to reassure TotalEnergies The EACOP holding company will be split
(France) and China National Offshore Oil Corp. 37.5% to TotalEnergies, the operator; 37.5%
(CNOOC), the two foreign shareholders in the to CNOOC; 15% to Uganda National Oil Co.
EACOP project, by barring changes in the tax- (UNOC); and 5% to Tanzania Petroleum Devel-
ation regime applied to the pipeline. It does so opment Corp. (TPDC). The French and Chi-
by means of a provision that prevents Kampala nese firms are both involved in developing the
from enacting any laws or regulations that might oilfields that will provide throughput for the
override the deal to which TotalEnergies and pipeline, with the former company serving as
CNOOC have already agreed. operator of Tilenga and the latter is leading work
“This Act takes precedence over all existing at Kingfisher.
laws relating to any matter under this Act, and The partners have said they will build EACOP
where there is a conflict between this Act and any along a 1,445-km route from Hoima, a town in
other written law, other than the Constitution, western Uganda, to Tanga, a port on Tanzania’s
this Act shall prevail,” the Observer said, citing coast. The pipe will handle 216,000 barrels per
language from the draft legislation. day of oil from Blocks 1, 1A, 2 and 3A in western
The newspaper went on to say that the tax Uganda, which are home to the Kingfisher and
bill provided for the partners in the EACOP Tilenga fields.
project to establish a holding company to build These fields are due to begin production in
and operate the pipeline in the UK. For tax pur- 2025 and will eventually yield at least 260,000
poses, though, this entity will be treated as if it bpd of crude.™

P6 www. NEWSBASE .com Week 37 16•September•2021