The battle for the basic law

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THE INSIDE VIEW

Politicians, investors or activists looking for a pattern to the myriad natural resource disputes in Africa are liable to be disappointed. The common theme is the growing acceptance, articulated by the OECD and the African Development Bank, that African governments have the right if not a duty to renegotiate chronically disadvantageous mining and oil contracts. This week Africa Confidential reports on the bitter dispute between Congo-Kinshasa and Canada’s First Quantum Mining. Although it has gone to arbitration in Paris, Canada wants the Kinshasa government sanctioned by the World Bank and the IMF for trying to appropriate an investor’s asset. Also in Congo, Ireland’s Tullow Oil is at odds with Kinshasa, which has stripped it of two exploration blocks and handed them to Aurora Empowerment Systems, whose Chairman is a nephew of South Africa’s President Jacob Zuma. In Uganda, Tullow put together a groundbreaking deal with France’s Total and China’s CNOOC to produce oil from the Lake Albert basin and build a pipeline to Kenya’s coast. There, Tullow bought out Britain’s Heritage Oil for over US$1.3 bn. but Kampala insists Heritage pay $360 mn. in capital gains tax on its hyper-profits. Heritage is protesting and international bankers are siding with Kampala. Likewise in Ghana, the USA’s Kosmos Energy seems to be losing its long war of attrition against the government, which opposes its attempts to negotiate a $4 bn. exit sale without consulting the state oil company.