Arbitration Proceedings Against Ugandan Government

Source: www.gulfoilandgas.com 5/16/2011, Location: Africa

Heritage Oil Plc, an independent upstream exploration and production company, announces that international arbitration proceedings have been commenced against the Government of the Republic of Uganda by Heritage Oil & Gas Limited, a wholly owned subsidiary of Heritage, (HOGL). HOGL is seeking a decision requiring, among other things, the release of approximately $405 million currently on deposit with the Ugandan Revenue Authority (URA) or in escrow with Standard Chartered Bank following HOGL’s sale of its interests in Blocks 1 and 3A in Uganda on 26 July 2010.

On completion of the sale of the interests in Blocks 1 and 3A in Uganda on 26 July 2010, Heritage received and retained $1.045 billion. An additional, approximately $405 million of the purchase price, was in part deposited with the URA and in part deposited in escrow pending resolution of a tax dispute with the URA. The position of both Heritage and HOGL is based upon comprehensive advice from leading tax experts in Uganda, the United Kingdom and North America; the disposal of the interests in Blocks 1 and 3A is not taxable in Uganda.

Accordingly, the arbitration proceedings concern HOGL’s claims that the Ugandan Government wrongfully or unreasonably withheld consent to the sale by HOGL of the rights under the Production Sharing Agreements for Blocks 1 and 3A, including by making this consent conditional upon the payment of a sum alleged to be a tax liability of HOGL. Whilst HOGL has sought to resolve the issue without resorting to arbitration, it has been left with no alternative but to take this step. The arbitration proceedings will be held in London in accordance with the provisions of the Production Sharing Agreements in relation to Block 1 and Block 3A.


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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