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A third discovery in the South Lokichar Basin raises the possibility that oil from Kenya’s first discoveries could reach the market quicker than Uganda’s, which date back to 2006. Tullow is pushing ahead with exploration and appraisal in Kenya, hoping that it can start to build an export structure into which Uganda can later feed. On the potential scale of the discoveries, Tullow points out that it has interests in 12 East African Tertiary Rift basins. Early success in Uganda’s Lake Albert, and more recently in Kenya’s South Lokichar, substantially derisks the others, though probably not all will deliver success, and exploration will move into further basins next year.

London’s Commercial Court has ruled that Heritage must reimburse Tullow Oil for a disputed $313m tax payment, in a case highlighting the complex behind-the-scenes negotiations involved in putting together a major oil deal in Africa. 
The Ugandan Revenue Authority sought the amount as capital gains tax on Heritage Oil after it earned $1.45bn from the January 2010 sale of its assets to Tullow. Heritage disputed the payment, so Tullow paid the tax to enable the sale and subsequent farm-down to go ahead.

The World Bank Group’s International Finance Corporation has announced an agreement with Oesterreichische Entwicklungsbank (OeEB), the Austrian development bank, to increase sustainable energy investment in sub-Saharan Africa, starting with Kenya, Tanzania, Uganda and Rwanda. OeEB agreed to contribute €2m ($2.6m) to support project development, capacity building and assistance to financial institutions under the Africa Sustainable Energy Facility, a joint IFC and European Investment Bank (EIB) programme to increase investments in renewable energy and energy efficiency. Both institutions are contributing equally to the €60m financing facility, while OeEB, alongside EIB, is providing additional funds for a support unit that will identify and facilitate investments.

The African Development Bank (AfDB) has launched its second Uganda shilling-denominated bond on the domestic capital market. The 12.5bn shilling bond, which closed for subscription on 27 May, is the latest issuance under a 125bn medium-term note (MTN) programme established in mid-2012. The MTN approach was adopted to allow the Bank to regularly tap into the Ugandan capital market, issuing various tranches rather than standalone transactions thereby minimising costs for its clients and reducing the lead time necessary to access the market. The AfDB said its return to the Uganda market reflected local demand for additional debt instruments and the need for local currency financing to push infrastructure and other development projects. 
The AfDB plans to launch new MTN local currency programmes in Nigeria and Zambia in the coming months.

Power project development seems to be gaining pace in Uganda as the government has turned to China to fund the 600MW Karuma dam, a project it previously planned to develop from its own resources. “We have begun negotiations with China to offer us credit to fund the project,” minister of state for energy Simon D’Ujanga told Reuters. “They will supply the contractor so that we don’t have to go through protracted procurement procedures.” The government signed a memorandum of understanding on 20 April with Turkey’s Mapa Construction for the 600MW Ayago dam project in the Murchison Falls National Park, while Katwe Geothermal Power Project Limited (KGPPL) has a power purchase agreement (PPA) for a 150MW geothermal project in Kasese district, western Uganda.

Germany’s Kreditanstalt für Wiederaufbau (KfW) has invited bids for participation in the Premium Payment Mechanism (PPM), part of the GET FiT Program Uganda. The PPM is intended to improve the financial viability of small renewable power projects by providing a payment per kWh on top of the renewable energy feed-in tariffs approved by the Electricity Regulatory Authority (ERA).

Tullow is seeking indemnification from Heritage Oil & Gas over capital gains tax it paid to the Ugandan government in 2010. The dispute dates back to Tullow’s acquisition of Heritage’s rights and interests in two Ugandan petroleum exploration areas in the Lake Albert Rift Basin, blocks 1 and 3A, for $1.45m almost three years ago. The Ugandan Revenue Authority (URA) levied a $404m tax on the transaction, for which Heritage said it was not liable, and Tullow ended up paying.

Tullow is seeking indemnification from Heritage Oil & Gas over capital gains tax it paid to the Ugandan government in 2010. The dispute dates back to Tullow’s acquisition of Heritage’s rights and interests in two Ugandan petroleum exploration areas in the Lake Albert Rift Basin, Blocks 1 and 3A, for $1.45m almost three years ago. The Ugandan Revenue Authority (URA) levied a $404m tax on the transaction, for which Heritage said it was not liable, so that Tullow ended up paying.

Long the exclusive preserve of small, specialised companies, East Africa has seen the arrival of a number of big players in the past couple of years, and even BP has an East Africa exploration manager looking at opportunities. But management of expectations is emerging as a key challenge – highlighted by the standoff between Uganda and international oil companies (IOCs).

On 30 January the Opec Fund for International Development (Ofid) signed a $12m supplementary loan agreement with Rwanda for the Electricity Access Scale-Up programme and a $10m loan with Uganda for the Energy Development and Access Expansion project.

The African Development Bank (AfDB) board has approved a $24m equity investment in the Kampala-based East African Development Bank (EADB) to strengthen its balance sheet and help improve its international credit rating.

The bidding process for the Karuma dam has again been halted, this time by an intervention from the Inspector General of Government, who has called for a fresh investigation into irregularities.

The Joint Coordinating Commission for the Kenya-Uganda refined petroleum products pipeline project is seeking expressions of interest from potential developers. The pipeline is to be developed as a public-private partnership under a 20-year build-own-operate-transfer arrangement.

Uganda’s parliament passed the long-awaited Upstream Bill on 7 December, paving the way for a resumption of licensing in open and relinquished areas. The Ministry of Energy and Mineral Development tabled two bills before parliament in February 2012, and the oil law has been the subject of vigorous debate since then. The Petroleum Exploration, Development and Production Bill 2012, known as the Upstream Bill, eventually passed by 149 votes to 39, and will be signed into law by President Yoweri Museveni.

An initial public offering (IPO) of shares in Actis-owned distributor Umeme which closed on 7 November was oversubscribed by more than 35%. But the utility remains under fire for poor performance after a series of blackouts caused by system upgrades and faults on the Namanve and Mutundwe substations, despite hopes that the commissioning of the Bujagali power station would alleviate the supply problem.