Week in review: Tullow Oil, Uganda Airlines, Crane Bank

Tullow Oil stake sale stalls. The London-based oil and gas exploration and production company is initiating a new sales process to reduce its 33.3% stake in Uganda’s Lake Albert oil project after a planned $900 million sale to joint venture partners Total E&P and the China National Offshore Oil Corporation failed to get clearance from the government. Tullow and its partners said they’d failed to secure another extension of the sale and purchase agreements. This was after failing to “agree all aspects of the tax treatment of the transaction” with the government.

Tullow said the Uganda Revenue Authority and Total E&P and Cnooc had failed to agree on tax deductions for the transaction price that the two firms would pay for Tullow’s assets. The government insists that the two firms should pay tax on the transaction. Earlier, it also rejected Tullow’s position that it should not pay capital gains tax on the transaction.

The development will further delay a final investment decision for the Albertine Graben’s upstream projects, which was expected by the end of this year, and also sets back discussions on the oil pipeline. The joint venture partners will not approve the project until the Tullow transaction is concluded, which means the final investment decision will most likely be made in 2020.

Meanwhile, Kenya made its first international oil exports from a project operated by Tullow Oil in Turkana’s Lokichar basin. The oil reserves were discovered in 2012. The country is still years away from full production and commercial shipments pending investments in infrastructure, including a pipeline.

Inflation slows in August. Consumer price growth slowed for the second straight month thanks to lower core inflation and food prices, bringing the annual inflation rate to its lowest level since June 2018. The annual headline inflation rate fell to 2.1% from 2.6% in July, largely due to a decline in core consumer prices to a 13-month low of 2.7% year on year.

Uganda Airlines made its maiden flight to Nairobi. The resurrected national carrier launched commercial operations with flights to Nairobi’s Jomo Kenyatta International Airport and Juba, South Sudan, on Wednesday, 27 August. The first flight had only eight passengers, although the numbers went up on subsequent flights during the week.

Other flights were to Mogadishu on Thursday and Dar es Salaam on Friday. The airline is currently operating four 76-seater planes and will initially fly to seven regional destinations that include Bujumbura, […]

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