State, energy firm attempt to resolve tax row

Officials of Cove Energy are in the country for talks with the government in a last-ditch attempt to resolve a row over Sh3 billion tax demand after it sold five oil blocks in Kenya following its acquisition by a Thai company.

The meeting in Nairobi comes against the backdrop of ministry of Energy officials’ refusal to sanction the firm’s transfer of its offshore licences to the new owner, PTT Exploration & Production (PTTEP).

Kenya is demanding a cut of the deal that saw assets in Kenya and Mozambique sold to Thailand’s PTTEP in August for $1.9 billion (Sh153 billion).

“They must pay. They have said they will sue us but they haven’t yet,” said Ministry of Energy commissioner for petroleum Martin Heya.
The demands come even as the government is yet to enact a law requiring transfer of mining assets be subjected to tax.

However, the constitutional stand that natural resources belong to the people of Kenya could prove tricky for foreign firms.