Uganda: Ruling on oil tax case to be secret

By ISAAC IMAKA.

Even though the government expects to spend at least Shs12 billion to foot the bill in the ongoing Heritage-Tullow-Uganda tax arbitration case, citizens will be kept in the dark about the outcome of the matter.

Why? The government of Uganda and the two parties in the case signed an agreement that the arbitration should be kept confidential. While appearing before the House Committee on Legal and Parliamentary Affairs, Attorney General Peter Nyombi said the decision to sign to a confidential clause was in line with the United Nations Commission on International Trade Laws. “In the agreement we signed before going to the arbitration tribunal, we agreed on a clause to keep the award confidential,” Mr Nyombi said.

Uganda is engaged in a Shs1.1 trillion tax contest with the oil companies. The dispute started when Heritage Oil and Gas Ltd announced its intention to transfer its Ugandan assets to Italian giant, ENI, in December, 2010. But Tullow Oil Uganda, which had a 50 per cent stake in the same assets, exercised its right of first refusal under the same terms. The URA then demanded 30 per cent of the $1.45m deal in capital gains tax before the transaction was approved.

Heritage objected to paying the tax, claiming that the transaction was not taxable in Uganda. The firm demanded to settle the tax dispute via the International Court of Arbitration in London. The Attorney General’s revelation that the judgement will be kept in confidence attracted chorus of disapproval in the committee, with MPs asking why the Ugandan tax payer will not be allowed to know the outcome of the case.

International rules, however, do not say the award should be kept confidential although parties to a dispute can agree that the award be confidential. “A judgement involving this country can never in any way be kept confidential,” said Mr Abdu Katuntu (FDC Bugweri). “People have to know that we have awarded this much. Do you want to say that in the worst event that we lose this case, the loss will be kept confidential?”

AG concedes

Mr Nyombi later conceded that Parliament will get the general judgement of the arbitration court.

“My interpretation is that Parliament is not public and that’s why I gave a letter to the Speaker and I am sure Parliament will know the general contents of the award,” he said.

Meanwhile, Mr Nyombi also informed the committee that he is working on a programme to pay all court debts the government owes in two years. The government has a Shs254 billion debt but has only set aside Shs4 billion for domestic arrears in the next financial year.

Source: Daily Monitor (01/05/2013): http://www.monitor.co.ug/News/National/Ruling-on-oil-tax-case-to-be-secret/-/688334/1762892/-/u3k34q/-/index.html