Uganda: Tullow Taxes Will Finance Karuma Dam

The planned Karuma hydro-electric power dam will be the first recipient of the Ush 1.1 trillion that accrued from the sale of Uganda’s oil fields by Tullow Oil.

Mr Keith Muhakanizi, the deputy secretary to the treasury at the ministry of Finance, said the money will be used to construct the planned 700MW electricity dam.

“The money is to be used for the Karuma dam construction until that policy changes”.

Tullow Oil paid up to $469 million (Ushs1.1 trillion) as capital gains tax accruing from the sale of 66.7 per cent of its assets in Uganda to its new partners; French oil company Total and the China National Offshore Oil Company.

Bank of Uganda received the payment for Tullow’s interests in oil blocks 1, 2 and 3a in western Uganda two weeks ago.

Tullow will earn up to $2.93 billion (Ushs7 trillion) from the transaction that was delayed over the Heritage Oil tax dispute.

The payment to the government followed the signing of two share purchase agreements between Tullow, Total and CNOOC at the end of last month.

The Karuma dam in northern Uganda is expected to cost between $1.4 billion and $1.5 billion (Ushs3.6 trillion), Mr Simon D’ujang the minister for energy told the press last week.

Mr Fred Kabagambe-Kaliisa the permanent secretary ministry of energy said the final cost will be known at the end of the current international bidding process.

He said the construction of the dam is expected to last three years.

Extra financing for the dam is expected to come from the $300 million Energy fund.

Last month, the Minister of finance Ms Syda Bbumba said the government will embark on constructing the power dam and an oil refinery in the new financial year that starts in June this year.

Karuma will be the largest and most expensive power project to be undertaken in Uganda.

The 250MW Bujagali Hydro Power project that is under construction is so far the most expensive dam to have been established in Uganda.

The first 50 megawatts from the dam are scheduled to come on stream in October this year.

The development is expected to cut back the frequency of the current power blackouts and cost of energy in Uganda.

No demonstrations

Meanwhile, Ugandan President Yoweri Museveni has warned he would not allow protests against food and fuel price rises led by opposition leader Kizza Besigye.

Museveni blamed drought in the country for the rising food prices and said international events had pushed up the price of oil.

“There will be no demonstrations in Kampala, if Besigye wants to walk for exercise let him do it somewhere else,” Museveni told a media conference at his rural home southwest of the capital.

“If Besigye demonstrates, will it bring international oil prices down? Will it rain because Besigye has demonstrated?” said Museveni in his first public reaction to the protests.
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Prices have been rising after drought cut food output across Uganda, while higher global oil prices have increased transport costs, pushing up food prices further in urban areas.

The consumer price index jumped 4.1 percent in March from February, pushing the year-on-year inflation rate to 11.1 percent, the fifth straight rise.

Security forces last week fired rubber bullets and teargas to disperse a crowd of more than 1,000 led by Besigye, Museveni’s closest rival in February elections. Besigye was injured after a rubber bullet struck his finger.

Many Ugandans complain of worsening poverty, but others respect Museveni for bringing stability to a country once plagued by brutal despots such as Idi Amin.

 

Source: allafrica.com

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