State pockets Sh1.83 billion in taxes and fees from Tullow Oil

British exploration firm Tullow Oil paid Sh1.83 billion in taxes to the Kenyan Government last year.

Tullow undertook a restructuring of its local unit that resulted in the laying off of 22 employees.

The re-organisation also saw Tullow appoint a new head for East Africa, where Kenya is its most critical operation after the sale of a substantial stake and ceding operator status in Uganda.

The firm, which is preparing to start production of oil in Turkana County on a pilot basis, paid a total of $18.3 million (Sh1.83 billion) in licence fees, value-added and withholding tax as well as taxes deducted from employees and remittances to the National Hospital Insurance Fund (NHIF).

Pay-as-you-earn (Paye) and NHIF deductions, according to the firm’s annual report to shareholders, took the lion’s share of the payments at $14.4 million (Sh1.4 billion).

The total payments made to the Government last year were 35 per cent more than the Sh1.3 billion that the firm paid in 2016.

The UK-headquartered firm said 22 employees left its Kenyan unit after last year’s restructuring.

The firm is preparing to start oil production and export under the Early Oil Pilot Scheme this year ahead of commercial production by 2022.

“Twenty-two members of staff left Tullow following a reorganisation of our Kenya business during the year,” said the firm in the report.

The firm has in the past said it was heading to a less labour-intensive phase, hence the restructuring.

The reorganisation also saw the appointment of Mark Macfarlane as the new senior manager for Kenya. He will oversee the country’s transition into an oil producer.

Maximising value

“In Kenya, based upon the results of the appraisal programme, he has transformed the approach to asset development to one that is focused on creating and maximising the value of the Kenya business,” said Tullow in the report.

Martin Mbogo previously oversaw Tullow Oil’s operations in Kenya as the country manager, a position he still holds but no longer reports directly to London.