Africa Oil exits Kenya after settling Sh2bn tax arrears
Africa Oil Kenya BV paid Sh2.17 billion ($15.5 million) between April and June this year as it moved to settle a tax dispute and other rows in the period when it ended interest in the Turkana oil fields.
The parent company has revealed the payments to the Kenya Revenue Authority (KRA) and other undisclosed partners, in its latest half-year report, covering the period that it operated in the country as one of the three firms spearheading Kenya’s oil search.
Africa Oil Kenya BV exited the Turkana Oil project in May after relinquishing its 25 percent shareholding to Tullow Oil. Total also ceded its 25 percent, leaving ownership of the South Lokichar oil wells to Tullow Oil.
Read: Why Total and Africa Oil abandoned Kenya's oil project
“In quarter two 2023, the company completed its negotiations on the penalties and interest relating to the historical tax dispute and settled historical partner and other disputes resulting in payments of Sh2.17 billion ($15.5 million),” Africa Oil said in financial disclosures for the period ended June.
The Canadian-owned oil and gas exploration firm had earlier disclosed a payment of Sh1.163 billion as an out-of-court tax settlement with the KRA.
Africa Oil Kenya BV did not disclose the historical partner, how much it paid and what the disputes entailed.
The firm bought its stake in the Turkana oil project through the acquisition of exploration rights to Block 10BB from Turkana Energy Inc.
Africa Oil Kenya BV had been embroiled in a tax dispute with the KRA from last November after the taxman was cleared by the High Court to collect $18.7 million as unpaid value-added tax (VAT) for 2011, 2012 and 2015.
But Africa Oil appealed the ruling a month later setting the stage for a protracted tax dispute with the KRA.
In March, Africa Oil rescinded its earlier decision and sought an out-of-court settlement with the KRA. It then paid Sh1.163 billion (about $8.8 million) to the KRA as principal of the VAT assessed.
The firm then disclosed that it was in talks with the National Treasury for a waiver or reduction of the interest and penalties.
Africa Oil ended its interest in the Turkana oil project in May, opting to concentrate in regions with high petroleum potential.
The exit followed that of TotalEnergies, which had since last year disclosed it was considering other options to monetise its stake.
Read: Total, Africa Oil Kenya exits spook investors
Exits of the two multinationals left the cash-strapped Tullow seeking a strategic investor to provide funds and help move the project to the commercialisation stage. BY BUSINESS DAILY
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