The Ministry of Justice is seeking another six billion shillings to meet the costs related to the Heritage Oil and Gas Limited case in London, United Kingdom.
Under-Secretary, Earnest Bafaaki told the legal and parliamentary affairs committee of parliament on Thursday that in the event that the court in London fails to rule in favour of Uganda, the Ministry will need the money to proceed with the matter in court. He said that the amount is one of the additional budgetary provisions for addressing priority areas.
Government is embroiled in a legal battle with Heritage over capital gains tax. Heritage Oil, a British oil company, is fighting to keep 404 million US dollars in capital gains tax.
Government had objected to the proceedings in London arguing that the arbitration case can be handled competently in Uganda.
The matter arose in May 2011, when Heritage initiated arbitration against the Government for the release of the 404 million US dollars held by the Uganda Revenue Authority (URA) following the sale of its interests in Uganda in July 2010 to Tullow at1.45 billion US dollars.
In March 2011, Government signed a memorandum of understanding with Tullow, separating the tax dispute from Tullow’s 2.93 billion dollar deal with France’s Total and China’s CNOOC. Tullow finally sold its stake to Total and CNOOC early February this year. Tullow was forced to pay 313 million dollars as security for the unpaid tax bill.
In April 2011, Heritage received a claim from the London High Court in which Tullow was seeking to recover the funds. A month later, Heritage sued the Uganda Government in London, saying the sale of its assets in Uganda was not subject to a capital gains tax.
Fred Ruhindi, the state Minister for Justice and Constitutional Affairs, says the government is equipping itself for any outcome of the ruling on preliminary objections to the main suit.
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Ajuri County MP Hamson Obua had demanded to know how far the case in London had gotten. The ministry was asked to return with a full statement on the matter next week.
Earlier this year, the Ministry of Finance extended 6.7 billion shillings towards the facilitation of the heritage case in London amid protests from parliament that the right procedure of approval was not followed.
