CONTROVERSY lingers over the intended acquisition of 40 per cent stake at US $130 million dollars (about 286bn/-) by Swala Oil and Gas Tanzania in Mauritius based PAE PanAfrican Energy Corporation (PAEM), the parent company of Pan- African Energy Tanzania (PAET).
PAEM, an offshore company operating from Mauritius, is itself a subsidiary of Orca Exploration Group registered in the British Virgin Islands, which operates the Songo Songo natural gas field under a Production Sharing Agreement (PSA) with the Tanzania Petroleum Development Corporation (TDPC). TPDC has already raised a red flag over the transaction, stating that it had not been involved in the multimillion deal.
It eventually asked the two parties to halt the transaction until it satisfied itself on the business deal. "As the licence holder for Songo Songo, we ought to be informed on any development which may affect implementation of the PSA between TPDC and PanAfrican Energy. "The transaction process should be put on hold until the government is satisfied with the deal," the TPDC Acting Managing Director, Eng Kapuulya Musomba, said during a news conference last Monday
. Swala acquired 7.9 per cent shares from PAEM in December last year at US $17 million dollars and it plans to acquire 40 per cent stake in total at US $130 million dollars, according to its Chairman, Mr Abdullah Mwinyi. A myriad of questions are lingering as to why Orca Exploration formed an offshore company in the tax haven, Mauritius, PAEM, to have majority shareholding in PAET, instead of directly taking charge of the ownership as a parent company. According to online encyclopedia, Wikipedia, a tax haven is a jurisdiction that has a low rate of tax or does not levy a tax as well as offers some degree of secrecy
. However, other definitions refer to a state, country, or territory which maintains a system of financial secrecy, which enables foreign individuals to hide assets or income to avoid or reduce taxes in their home jurisdiction. Sources close to the transaction intimated to this paper that Orca Exploration decided to establish the offshore company to avoid paying taxes in multiple jurisdictions, a move which raises more questions than answers.
Surprisingly, even as Swala envisages acquiring the 40 per cent stake in PAEM, its Chief Executive Officer (CEO), Dr David Mestres Ridge, pointed in a video conference yesterday that his company was just a shareholder with no intention of running the show at PAET. "For Swala, everything below PAEM has nothing to do with us, we will not be making any decision in the operations of PAET," Dr Ridge claimed, maintaining that the transaction was transparent and that it adhered to the laws of Tanzania. If the deal to acquire