Friday, April 16, 2010

Shell ordered to deposit Shs35b before quitting

Kampala - The High Court has ordered Shell Uganda Ltd to deposit at least Shs35 billion ($17.5 million) with it before the company, or its shareholders and executives, can sell its operations in the country.

The order was announced by Mr A.G Opifeni, the assistant registrar, Land Division, last week over a land dispute between the oil vendor and a shipping company, Mercator Enterprises Limited. The dispute over Plot 49 on Ben Kiwanuka Street, which has come back to haunt Shell, dates as far back as 1972. The court order came less than a month after Royal Dutch Shell, the parent company of Shell Uganda, announced that it would dispose of 21 of its African subsidiaries including Kenya, Tanzania, Botswana, and Namibia among others. Last month, Shell global’s CEO said the multinational plans to exit 35 per cent of the company’s current retail markets as part of an international strategy to focus on the upstream exploration and development of oil resources.

In an interview, Shell Uganda’s country manager Ivan Kyayonka said he was unaware of the court order, although he is aware of the dispute. He did not comment on the possibility of Shell depositing the Shs35 billion because the case is still before court. “It is prejudicial for me to discuss anything in court. I have nothing to tell you,” Mr Kayonka said in a phone interview.

The court order comes in a long-standing property dispute that was launched in the Uganda courts in 1993. The lawsuit demanded transfer from Shell of a commercial property in central Kampala, which the claimant, Mercator Enterprises Limited, says Shell should have transferred in 1972. The lawsuit also claims for all accumulated back rents, interest, and costs since 1972. But in 2001, Shell agreed to transfer the property, and subsequently did so. At the same time, Shell also consented to a court order stating that the rent for the property would be agreed between the parties, or, failing agreement, determined by the court.

Mercator’s property experts have advised their client that if the court does award their full claim, then the total amount will be about Shs35 billion. But the final decision on the amount to be paid rests with the court.

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