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    Posted February 18, 2013 by

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    Irish oil major Tullow Oil wreaks havoc in Africa

    Somewhat ironically, the oil company behind the ‘Invest in Africa’ scheme is avoiding tax in Africa, according to the latest investigative report by the NGO Platform London. Irish firm Tullow Oil, one of the oil industry’s major players, has been implicated in a report along with two other multinational oil firms accusing it of avoiding corporate tax during operations in Africa.

    The claims are incredibly damaging considering the firm’s championing of the ‘Invest in Africa’ cause, a movement that hopes to promote Africa as an investment hub and as an attractive marketplace by challenging misconceptions about the continent and inspiring new investors. The ‘Invest in Africa’ scheme also gained considerable attention this year after securing a place on the kits of English football team Sunderland FC.

    The scheme now seems little more than a marketing ploy on the back of Platform London’s latest report. The report, which also accuses Tullow of “exploiting legal mechanisms in Uganda”, adds to the company’s list of growing concerns on the continent.

    Disregarding unsubstantiated claims that Tullow Oil and Italian company Eni SPA bribed Ugandan government members €17 million to enter the market there in the first place, the firm’s position in Uganda has now become a serious problem.

    Not only is the firm locked in arbitration with another oil firm over a capital gains tax dispute, Tullow recently took the Ugandan government to an international court after VAT was placed on machinery it imported into the country for operational work. Despite the case being filed in November, proceedings have not yet come to an end and the Ugandan government has exhausted the $1.5 million it budgeted for legal fees in the arbitration.

    The firm is also locked in a stand-off with the Ugandan government over the construction of an oil refinery; oil firms are contending that building a refinery would not be profitable, though it is vital for the economic potential of the country.

    Tullow has since been forced to deny wanting out of the East African country, with commentators pointing out that the firm has not met production targets there either despite it claiming in September 2009 that the Ngassa-2 exploration well had the potential to be the largest producer in the region.

    These missed production targets have caused chaos for other African governments too; in Ghana, the company’s Jubilee project produced less oil than expected, creating a massive shortfall of $410 million in the Ghanaian government’s budget.

    In Kenya, Tullow’s claim that the country had more oil than Uganda led the government to change its entire energy policy and to withdraw from the aforementioned Ugandan oil refinery project.
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