Court halts Shell’s exit from Uganda
Apr 13, 2010
THE High Court has put halted oil giant, Shell’s intended exit from Uganda. Shell has to deposit at least 35 billion Uganda shillings (about USD17m) before the company can divest its operations in the country.
THE High Court has halted oil giant, Shell’s intended exit from Uganda. Shell Uganda Limited which is part of the Royal Dutch Shell plc group was due to wind up its operations in the country as its parent company moves to concentrate on oil exploration.
The court has ordered Shell Uganda Limited to deposit security of not less than UGX35bn (USD17m) before the company can divest its operations in the country.
The deposit is security for due performance of a court decree obtained by Mercator Enterprises Limited which has had a long standing legal battle with the oil giant.
Mercator filed for an interim order from the suit filed in 1993 in which it demanded transfer from Shell of a commercial property in central Kampala, plus payment of accumulated rents and interest for the use of its property.
In 2001, Shell agreed to transfer the property, and did so. A consent order was entered in which Shell agreed to settle its debt obligations with Metacor in mutuality.
Shell intends to abandon its retail businesses in Algeria, Botswana, Burkina Faso, Egypt, Cape Verde, Ghana, Guinea, Ivory Coast, Kenya, Madagascar, Mali, Mauritius, Morocco, Namibia, Réunion, Senegal, Tanzania, Tunisia, Togo, and Uganda.
The order issued by the Court prohibits Shell Uganda Limited and its directors from transferring shareholding as well as its assets without furnishing the requisuite security.
According to a Metacor spokesperson, Shell had insisted that they had never rented out or earned any rents from premises in the property.
Metacor’s lawyers, Didas Nkurunziza & Co Advocates yesterday issued a statement warning the public about transactions with Shell related to its intended divesture.
Shell is reported to have made significant financial gain from leasing the property for which Metacor now claims to be entitled to benefit because Shell didn’t honour its end of the bargain in the consent order.
Shell would become the third big-time oil company after Agip and Chevron (formerly Caltex) to exit the Ugandan market. The assets of American giant Chevron whose exit from Uganda was finally concluded in 2009 were taken over by French owned Total.
Shell has been a major tax payer in Uganda and in 2007, it was the second highest tax payer after telecoms operator MTN Uganda. Shell paid at least Shs140 billion shillings to the Ugandan treasury.
The court has ordered Shell Uganda Limited to deposit security of not less than UGX35bn (USD17m) before the company can divest its operations in the country.
The deposit is security for due performance of a court decree obtained by Mercator Enterprises Limited which has had a long standing legal battle with the oil giant.
Mercator filed for an interim order from the suit filed in 1993 in which it demanded transfer from Shell of a commercial property in central Kampala, plus payment of accumulated rents and interest for the use of its property.
In 2001, Shell agreed to transfer the property, and did so. A consent order was entered in which Shell agreed to settle its debt obligations with Metacor in mutuality.
Shell intends to abandon its retail businesses in Algeria, Botswana, Burkina Faso, Egypt, Cape Verde, Ghana, Guinea, Ivory Coast, Kenya, Madagascar, Mali, Mauritius, Morocco, Namibia, Réunion, Senegal, Tanzania, Tunisia, Togo, and Uganda.
The order issued by the Court prohibits Shell Uganda Limited and its directors from transferring shareholding as well as its assets without furnishing the requisuite security.
According to a Metacor spokesperson, Shell had insisted that they had never rented out or earned any rents from premises in the property.
Metacor’s lawyers, Didas Nkurunziza & Co Advocates yesterday issued a statement warning the public about transactions with Shell related to its intended divesture.
Shell is reported to have made significant financial gain from leasing the property for which Metacor now claims to be entitled to benefit because Shell didn’t honour its end of the bargain in the consent order.
Shell would become the third big-time oil company after Agip and Chevron (formerly Caltex) to exit the Ugandan market. The assets of American giant Chevron whose exit from Uganda was finally concluded in 2009 were taken over by French owned Total.
Shell has been a major tax payer in Uganda and in 2007, it was the second highest tax payer after telecoms operator MTN Uganda. Shell paid at least Shs140 billion shillings to the Ugandan treasury.