Tullow transparency report shows it paid Sh1.9bn to taxman
An oil rig at Ngamia 1 in Turkana. Tullow said it paid the Kenyan government Sh1.9 billion in taxes last year. FILE
What you need to know:
The payout includes VAT, withholding tax on imported services and PAYE on salaries of its over 100 workers.
Tullow further disclosed that more than 70 per cent of its staff in Kenya are locals.
The company has also engaged 2,155 personnel from its contractors, with 83 per cent of those being Kenyans.
London-listed Tullow Oil disclosed on Tuesday that it paid the Kenyan government Sh1.9 billion in taxes last year, prompting calls for more transparency in oil contracts.
The payout includes VAT, withholding tax on imported services and PAYE on salaries of its over 100 workers.
Although Kenya law does not require such disclosures, Tullow said the European Union demanded such project-by-project assessments to help citizens hold oil firms and governments to account.
EU directives will soon oblige oil and mining companies to publish tax, royalty and other payments to foreign governments.
Tullow further disclosed that more than 70 per cent of its staff in Kenya are locals.
The company has also engaged 2,155 personnel from its contractors, with 83 per cent of those being Kenyans.
Stakeholders welcomed Tullow’s disclosures and called on the government to pass laws that would make it mandatory for oil transactions to be made public.
“We believe that for prudent management of resources, disclosures should be made compulsory in legislation for all companies operating in Kenya,” the Kenya Civil Society Platform on Oil and Gas (KCSPOG) said in a statement.
The organisation added that such disclosures should start from the concession stage and include all agreements.
Tullow’s disclosures come at a time when Kenya is reviewing its energy laws, with KCSPOG raising concern that the draft Energy Bill lacks provisions that would compel firms to disclose all aspects of their operations.
“A fundamental flaw is the lack of a ring-fencing mechanism,” KCSPOG said, adding that project-based reporting would make it easier to spot company inefficiencies that would have an effect on government revenues.
It remains to be seen whether other oil majors will follow Tullow’s path in disclosing financial aspects of their operations in Kenya.
The oil and gas industry has traditionally resisted such disclosures, a reluctance that has been seen as fostering corruption in the lucrative sector.
The US oil industry lobby, for instance, is seeking to block regulators from making such disclosures mandatory for oil and mining groups according to reports in the Financial Times.
The figures released by Tullow offer a glimpse into the multi-billion-shilling revenues the government earns annually from the oil industry where several firms are engaged in exploration.
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Note: The results are not exact but very close to the actual.
