Following the oil cash bonanza involving Uganda Revenue Authority bosses together with a host of top government officials, President Museveni has reportedly described the oil cash bonus beneficiaries as ‘heroes’ and explained that the payment was made in good faith to appreciate their effort in the successful arbitration cases that led to the government’s recovery of about $700 million as capital gains tax. Read More
REFINERY-AFFECTED PUPILS CRY AS WORLD MARKS INTERNATIONAL LITERACY DAY
Hoima-Buseruka leaders call for more schools
As the world marks International Literacy Day today –September 8, 2016-, we take a look at the dismal state of education in the oil region, focusing on how oil activities are further harming education.
Sixteen-year old Catherine Nyayenga does not want the events from the last school term to ever replay themselves in her life again.
Until 2012, her thirst for education was ably quenched by her hardworking parents and teachers.
Her parents practiced farming from which they paid her school fees while her teachers gave her the knowledge she requires to achieve her dream of becoming a doctor.
She was a good and curious student, soaking in the knowledge provided by her teachers and probing for answers on topics she did not understand. She was determined to do well and become a doctor.
Then government acquired 29 sq. km of land in Kabaale-Buseruka, Hoima district for a refinery. Her father’s land was part of the land that was acquired.
Government set a CUT-OFF date of June 2, 2012 meaning that property that was put up after the cut-off date would not be compensated.
Economic activity in the refinery area stalled. Nyayenga’s father’s fortunes dwindled. He increasingly found it hard to pay her school fees culminating into her missing her Mock exams last term.
Today, Nyayenga who is a student at Central High School in Hoima, has been turned into a beggar who asks for money so as to stay in school. AFIEGO offered her some.
It is important to however note that it is unsustainable to educate all the pupils and students whose education has been negatively affected by the refinery project.
As we have previously told you, education in the refinery area has been direly compromised.
The two primary schools, Nyahaira P/S and Kyapaloni P/S, collapsed living thousands of pupils without education. Government has left these pupils without education since 2012!
Access to education for children outside the refinery area is also difficult. Buseruka sub-county has only one secondary school, Buseruka secondary school.
“After completing P.7, our children drop out because the distance from Kaiso to Kabaale is too long. The boys become fishermen while the girls get married. Some become prostitutes at the landing site [on Lake Albert],” Mr. Henry Irumba, the L.C.1 Councillor of Kaiso landing site, which is located in Tonya parish, Buserka sub-county, says.
He appeals to government and oil companies such as Tullow Oil to construct secondary schools in Tonya parish; Buseruka Secondary School is in Kabaale parish, which is 26.6 Km from Tonya.
Mr. Vincent Opio, a leader in Buseruka sub-county, also says that in addition to urgently returning refinery-affected pupils to school, more secondary schools are needed.
“How can Uganda say that it is aspiring towards local participation in the oil sector and for middle income status when it has failed to provide education for the refinery-affected pupils for over four years?
The pupils should be returned to school. We also need more secondary schools,” Mr. Opio says.
Reporting by Sandra Atusinguza
Field Officer, AFIEGO
A summary of some of the gaps in and weaknesses which require addressing include:
Africa Institute for Energy Governance (AFIEGO) and the Guild Presidents Forum on Oil Governance (GPFOG) have written to the Minister of Energy and her ministry asking her to urgently address weaknesses against and fill gaps in the draft National Content policy and implementation plan -dated July 2016- that have been formulated by her ministry. READ MORE
1/3: This week, the refinery-affected people of Hoima district will hold a press conference in Hoima to cry for help in the face of government’s failure to compensate some of them, relocate others, provide education for school children, provide health care and worst of all, plans to resettle them in a special settlement that will make them extremely poor.
Mrs. Elvanesiti Tindigwihura, who is over 80, is one of the people who will be crying for help. Her land was acquired by government in 2012 and she is yet to be compensated! Her living situation has deteriorated due to the delayed compensation. The same can be said for the over 130 families that are yet to be relocated and compensated. READ MORE
Dear Mr. President, thank you for the state of the nation address you made on May 31, 2016 before the 10th Parliament at the Serena Conference Centre. It is indeed good that you continuously account to Ugandans on the state of affairs in our country.
As you have often done, you talked about the expensive nature of Uganda’s power owing to the high price of electricity generated from Bujagali hydropower dam. You also said that power generated from Karuma, Isimba and other dams will bring down the prices of electricity. READ MORE
I recently had a rather interesting conversation with a taxi cum long-distance driver. We were on our way to Hoima for work-related activities and seeing as we were getting close to the oil region, our conversation turned to Uganda’s oil. What opportunities does it present? How about the challenges? Was the driver hopeful seeing as Uganda had a whole 6.5 billion commercial barrels of oil?
No, he said. He was not hopeful.
“That oil is not ours. It is for a select few,” he said in Luganda, which I have loosely translated. READ MORE
No doubt government’s acquisition of land for an oil refinery in Kabaale parish, Buseruka sub-county, Hoima district starting in 2012 has had serious socio-economic consequences. On the one hand, we have the communities whose land was acquired and these suffered direct consequences some of which have been previously documented.
They include loss of livelihoods –government set a cut-off-date of June 2, 2012 and forbade putting up of new developments, including growing of perennial cash crops, on refinery land-, loss of access to social services such as schools – schools lost teachers when families were compensated and moved away; Nyahaira P/S remained with one teacher while Kyapaloni P/S remained with only two. Families also lost access to services such as health centres and markets. READ MORE
On February 10, 2016, over 160 community members of Rwemparaki village, Buhimba sub-county, Hoima district sit under various shades and drink in the words of Oil and Gas consultant Stainslas Birungi.
He tells them about Uganda’s oil and gas resources –he says that Uganda has an estimated 6.5 billion barrels-, how these resources can be extracted and how they can be transported.
He speaks about other important matters but the subject that is closest to their heart is that of how they can ensure their property rights are respected.
You see, late last year, government, through Newplan Consults Limited, informed members of 17 communities in Buhimba and Kizirafumbi sub-county that it intended to acquire land to transport Uganda’s oil products from Hoima to Kampala. The amount of land needed was big -133 metres wide and 230km long over 17 villages- and it would be used to construct the aforementioned oil pipeline, power lines and dual carriage roads.
That news was greeted with fear!
So much fear did the news elicit that the local leadership of the two sub-counties approached AFIEGO to sensitize community members about how they can protect their land rights in the impending pipeline project.
“Our people saw what happened in the refinery project. [Over 7,000] people’s land was taken with small compensation and after wasting that small compensation, the people are back in the refinery area!
Our people are also aware that some people affected by the refinery project have not yet received compensation and those who requested for relocation [in 2012] have not yet received been relocated.
As such, they were afraid and we looked for ways to prevent them from suffering the way the refinery people suffered. We approached AFIEGO to sensitize us on our property rights and we appreciate the sensitization efforts undertaken so far,” Fenehasi Kato, the L.C.1 chairperson of Kikube village, Kizirafumbi sub-county said in early March.
When AFIEGO was approached by the leadership of Buhimba and Kizirafumbi sub-counties, –the L.C. 3 chairpersons Mr. David Atuhura and Mr. Francis Bwesige respectively approached AFIEGO- we embarked on property rights sensitization exercises where a wide range of topics including property rights as provided for by Uganda’s constitution, Land Acquisition Act and Land Act, the importance of Environment and Social Impact Assessments in ensuring successful resettlement of people and sustainable use of the environment and the importance of access to information to enable participation of affected communities in oil sector processes among others was discussed.
In addressing property rights, AFIEGO pointed out rules governing compulsory land acquisition, the right to be paid prompt, fair and adequate compensation if the acquisition is to take place, the right for those who ask for relocation to be resettled on consensus and get land for land, a house and title for the land. The right to be consulted by the District Land Board while compiling and updating compensation rights and the right to be assessed based on up to date compensation rights.
To date, AFIEGO has been able to conduct 11 property rights’ sensitization meetings for members of the villages set to be affected by the Hoima-Kampala pipeline project. Over 1,200 community members have been reached and their knowledge of property rights and ways in which they can ensure that their rights are respected during the land acquisition process for the pipeline project has increased.
“I now know what my rights are. I also know that I have to be alert during the project to get my due compensation,” Basara Kanyomoza of Kikube village, Kizirafumbi sub-county says.
Increased knowledge of property rights and decreased fear of the oil pipeline project isn’t the only positive result that has been realized from AFIEGO’s property sensitization meetings in the two sub-counties.
Following the meetings, Ministry of Energy and Newplan Consults Limited officials were pressurized into organizing four meetings, two in Buhimba sub-county and two in Kiziranfumbi sub-county, where they committed themselves to the communities that the acquisition and compensation process will be fair and every affected person will be happy.
It is important to note that when Newplan Consults Limited first went to Buhimba sub-county, they did not involve local leaders in their meetings where they talked about the impending Hoima-Kampala oil pipeline project. Ministry of Energy also committed the same error.
But these have been corrected through AFIEGO’s involvement with the community. This could see improved access to project information by the communities.
AFIEGO plans on continuing property rights sensitization meetings in the six villages we have not reached. In addition, we will also extend our work to Buseruka sub-county as requested by communities there since the two villages, Kigaaga and Kijumba, are also set to be affected by the Hoima-Kampala oil pipeline project.
By Doris ATWIJUKIRE
Local communities in Hoima district which are set to be displaced by the Hoima-Kampala oil pipeline project have requested Ministry of Finance to facilitate the Hoima District Land Board to carry out a review exercise of compensation rates so that it can update the rates. This followed the communities’ requests, made early this month, to the Land Board to review and update compensation rates in an exercise where the communities would be involved.
The communities’ demands come on a backdrop of government plans to acquire land for a refined petroluem products pipeline between Hoima and Mombasa via Buloba in Wakiso. Having been told about these plans last year, the communities fear that they could be compensated with old rates that do not reflect current market prices as happened in the refinery project.
Worse, the communities fear that government could “import” insufficient compensation rates as is reported to have happened in the refinery project.
“We support government in her efforts to develop the oil sector but we also want our people’s rights and welfare to be upheld. This is why among the activities we are engaging in to ensure that our people’s welfare is upheld, we are requesting that the Ministry of Finance facilitates the Hoima District Land Board to review compensation rates and put in place updated ones for the year 2016/2017,” Mr. Francis Bwesigye, the L.C.3 chairperson for Kizirafumbi sub-county in Hoima district says.
Land is set to be acquired from seventeen villages located in Kizirafumbi and Buhimba sub-counties in Hoima district for the aforementioned pipeline project. Land will also be acquired from two villages in Buseruka sub-county, Hoima district.
Since learning of government plans to acquire land for the Hoima-Wakiso-Mombasa pipeline, communities set to be affected by the project have engaged in various efforts to ensure that their rights are respected. Some of these have included inviting and partnering with AFIEGO to be trained on property rights amidst oil development. The communities have also tasked the Ministry of Energy to engage with them on the project and provide timely information.
Additionally, the communities have set tough terms that must be met before government can acquire their land. Some of these are the demand that NEMA must conduct Environment and Social Impact Assessments and the Ministry of Energy must provide a rehabilitation and resettlement scheme for the pipeline project before government acquires land. You can view the rest of the conditions set by the communities here under the article titled, Oil pipelines project: Communities set tough conditions for govt.
Fausta Tumuhairwe is a resident of Kyapaloni village in Kabaale parish Buseruka sub-county, Hoima district. Part of her land was acquired by government for the oil refinery in 2012.
The land on which her kitchen was sitting was acquired leaving her with only a small piece of land on which her house is sitting; her house borders the oil refinery.
Tumuhairwe and her daughter standing next to her house
At first, government had refused to construct her a house because only part of Tumuhairwe’s land was acquired. Tumuhairwe was uncomfortable with living near the refinery and she approached AFIEGO to lobby the Ministry of Energy on her behalf. Tumuhairwe is one of several people who approached AFIEGO over this and other matters including delayed relocation and low compensation.
Following various interventions by AFIEGO and her partners –these interventions have included dialogues, petitions and media articles calling for the construction of houses for all 93 families which opted for relocation from the refinery land-, the Ministry of Energy has allowed to build Tumuhairwe and five other people including Innocent Tumwebaze, Ozelle Jarvian, Agenonga Gideon, Donna Mubutu and OnegaJaa Nyabikunnyahouses.
A foundation of one of the houses for the refinery-affected people
ABOUT THE HOUSES
A three-bedroomed house is being built for each of refinery-affected family that is getting a house; the families now stand at over 50.
A plan for the refinery-affected people’s houses
Each of the houses will sit on a 50 by 100 feet plot of land. Some refinery-affected people have said that this land is too small and that the spaces between their housesare small. They would want more space to construct pig sties, chicken coops and other infrastructure for animal husbandry.
The companies that were contracted by government for construction include: SAMADHURU which is constructing houses, Build Base for building three schools, two health centers, one church and one mosque and New Plan Ltd, who are the consultants.
Ministry of Energy and UHRC officials at the meeting in Hoima where plans to construct houses for 6 more people were announced
AFIEGO will continue to pursue efforts aimed at seeing that all 93 refinery-affected families get houses as per government’s Resettlement Action Plan. AFIEGO will also continue in her efforts to see that the over 30 families which rejected compensation on grounds that it was low get their rightful compensation.
Heavy policy deployment at the meeting
Grimness continues to surround the 131 families awaiting relocation and re-evaluation of their property that was acquired by government in 2012 for Uganda’s refinery as in a February 4, 2016 meeting attended by Ministry of Energy’s refinery project manager, Mr. Robert Kasande in Hoima district, government revealed that following re-evaluation of some families’ property, unfair low compensation was still being given.
Mr. Tom Mpabaisi and Esther Abigaba’s house was re-evaluated and following the process, Strategic Friends International (SFI) –the firm in charge of resettling refinery-affected persons- said that the duo’s house was worth Shs. 2.4 million, up from Shs. 1.4 million to.
The revision was greeted with grimness.
“That compensation is still too too low. I have a five-roomed house and that money just enough to buy bricks for my house. I need at least Shs. 30 million to restore my house when I relocate from the refinery,” Mr. Tom Mpaibasi, who is Miss Esther Abigaba’s husband, said after the meeting.
While SFI also revealed that the Mpabaisi’s land was also being re-evaluated, the 31 people who rejected compensation on grounds that it was low are not hopeful.
“The value that they have attached to the Mpabaisi’s land shows that we will also be offered little money. That is unacceptable and we shall continue to pursue our court case to see that we get the right compensation for our property,” Godfrey Byaruhanga, a refinery-affected person who rejected low compensation for his property, said.
At the meeting, 16 people who opted for relocation walked out on the Ministry of Energy and SFI when the ministry insisted that only the refinery-affected people who had houses when their land was acquired would be given land and houses; the rest would only receive land.
Giving of land, land titles and houses to all 93 families that opted for relocation is a sticking point amongst refinery-affected people because in the Resettlement Action Plan (RAP), government promised to give land, a land title and a house for everyone that opted for relocation.
Police was also heavily deployed at the meeting, a move that refinery-affected people said was meant to intimidate them.
“Government may resort to all sorts of tactics to intimidate the refinery-affected people but as they have shown, they know their rights, including their property rights and we will continue to support them to enjoy them.
We will also continue to support them to pursue justice in court so that they get their rightful compensation,” Dickens Kamugisha, the CEO of AFIEGO said following the meeting.
*The meeting in this article was convened following a January 21, 2016 discussion between the Uganda Human Rights Commission (UHRC) and the refinery-affected people about the human rights abuses being perpetuated against the refinery-affected people. UHRC held the discussion following youth working with AFIEGO petitioning the body calling for cessation of human rights abuses against the refinery-affected people.
During the conference whose theme was Energy as a determinant of competitiveness, it was revealed thatKenya's unit cost per kilo watt of electricity is $13 cents and the country’s access stands at 40%, Tanzania is at $14 cents and access at 27% while Uganda is at $19 cents and access at 15%. I will leave out Rwanda and Burundi because our economies are very different but still Rwanda has access of 17%. I need to note that this information is public and everyone who is interested can access it.
It is also important to note that the former ERA chief, Dr. Frank Ssebowa, attended the TRAPCA conference too where the above figures were shared.
On corruption in the power sector: During the same conference, it was shared that while Uganda generates over 90% of her electricity from hydro because River Nile has large volumes of water throughout the year, Kenya and Tanzania generate over 70% of their power from sources such as thermal. Kenya’s and Tanzania’s rivers are seasonal and none of them has volumes of water similar to those of the Nile. Indeed, today, Tanzania generates over 960mw of her over 1,500mw total power from thermal.
It is important to note that when Uganda was generating 150mw thermal, government used to tell us that the tariffs were high because of thermal fuel costs. Now, most of our power is hydro but tariffs are still high; they are even higher than those of countries such as Tanzania that are using thermal power. One wonders, why are our tariffs higher? Corruption at the stage of awarding contracts for construction of dams likely explains the higher tariffs. With inflated costs of dams due to corruption, costs are passed on to consumers as investors work to recoup their costs.
At the peak of Uganda’spower crisis in 2010 and 2011, President YoweriMuseveni blamed NGOs such as AFIEGO for delaying the building ofBujagali dam. He did not appreciate our role as advocates of transparency and he went ahead to ignore our genuine concerns about the high costs of Bujagali.
Today, the same president is crying about inflated costs of Bujagali electricity. Perhaps he did not know the implications of corruption on the efforts of government to provide clean and affordable energy to the citizens.We need to note that at the commencement of the Bujagali dam project seven years ago, we had been promised that power produced at the dam would cost $6 cents but today, it costs over power is over $13 cents. Uganda’s power is expensive indeed.
As Ugandans, we need to note that again, Uganda is constructingKaruma dam at a cost of $1.7 billion to generate only 600mw. Ethiopia, on the other hand, is building the Grand Renaissance Dam of 6,000mw at a cost of $4.8 billion. Ethiopia’s dam is almost 10 times cheaper than Karuma dam. Uganda’s power sector is indeed facing big problems.
Yes, the government and UMEME can be happy that the customer base has increased from around 200,000 in 2005 to approximately 650,000 customers today. But in a situation where 90% of these customers including you and me who are earning salaries every month cannot use such power for even 10% of our energy needs such as cooking, boiling water, ironing and other vital roles, then, there is a problem.
If you want to appreciate how Uganda’s power is difficult to use, visit Ntungamo town. You will find big shops of tailors with a light inside but they still iron customers’ clotheswith charcoal flat irons and the reason they give is abnormally high tariffs.
But you do not have to go all the way to Ntugamo to decry the poor service UMEME is giving its customers. When Mr. Rugamba’s aforementioned article was published on the Daily Monitor’sFacebook page, all comments posted in reaction to the article said that power was too expensive and the commenters were not appreciative of UMEME’s services.
I live in Buwate, which is close to Kiwatule, but almost every day and night, we have no power and as I write this article, we are using generators because we have no electricity! The situation has been like this for over three years now. Our businesses have collapsed, offices closed and the residents cannot move freely at night because of thugs taking advantage of darkness. Can we say that UMEME is giving us good service despite the investments UMEME says it has made? The answer is no.
The writer is the CEO of Africa Institute for Energy Governance
To the above question, we say a lot is at stake. As we suspect most of us are aware, the president we choose come the presidential polls in February 2016 is the president who will preside over the oil and gas sector during a very critical period, that of production.
While the date of commencement of oil production keeps changing, it is projected that oil will begin flowing in 2019. Uganda’s estimated 6.5 billion barrels of oil are expected to generate $ 3 billion per year; that amounts to more than 10 trillion shillings per year and this money has the potential to transform Uganda to middle income status which the country is aspiring towards as early as 2019. If governance problems affecting Uganda continue however, we may miss the transformation. What are some of the problems affecting Uganda?
If we, Ugandans, seriously thought about the amount of money we lose to corruption per year, even the strongest of us would get a heart attack. If we thought about the uses to which that money could be put, we would have more heart attacks. What am I talking about?
Five hundred million dollars ($ 500m) is lost to corruption in a year. What could this money do? It could be put in sectors such as health, roads or agriculture and as such, it could help us get better services in hospitals, boost incomes for those in the agricultural sector and our economy in general in addition to helping us have better roads.
I think we have all seen the state our roads in Kampala have turned into following these November El Nino rains. Potholes have enlarged and you and I, the taxpayer, are going to incur extra cost of corruption in the road sector that has seen us get roads that cannot survive the rain.
The money could also be used to construct a dam that would lower the cost of doing business and even could see us domestic users be able to meet our energy needs including cooking. This of course would only be possible if Uganda didn’t inflate the cost of her dams. (See Corruption and ERA institutional weakness killing electricity sector in Uganda in our October newsletter).
Indeed the money could do a lot and as such, we need to vote for a leader with zero tolerance to corruption. The need to have a president who cracks the whip on corruption will be even more important when Uganda begins oil production because African countries such as Nigeria have demonstrated that oil can result in more corruption.
Already, Uganda has lost $ 223 million because the minister of energy signed a bad agreement with Tullow Oil. The agreement had exemption clauses. This minister also has a lot of unchecked powers in the oil sector that could foster corruption.
Who of us has seen the Production Sharing Agreements (PSAs) Uganda signed with Tullow Oil, Total E&P and CNOOC? What about the feasibility study report that was done for the refinery? Better yet, who has seen the Resettlement Action Plan (RAP) report for the refinery project in Buseruka sub-county, Kabaale parish, Hoima district?
Few of us have and unless we rise up and demand for them, or better yet, unless we vote for a president who is pro-transparency, we will never see these reports. Yet it is important for us to be informed about the kinds of agreements our government is getting us into. Are they giving investors in the oil sector too many tax exemptions? Are other concessions too many? We need to know and we need a president and government that shares information on what is happening in the oil sector to enable us participate and ask that we get better deals. We want to maximize the benefits from our oil because the resource will not last forever. We will maximize these benefits by knowing what is happening in the sector so that we can participate and determine the kind of deals we want at every stage of development.
We therefore need to vote for a president who will champion transparency in the oil and other sectors.
LACK OF ACCOUNTABILITY
The need for accountability in Uganda cannot be overly stressed and we should do ourselves a great service by voting an accountable leader who asks for the same from his or her government officials. This is because day in, day out, we see corruption thrive and this costs us good roads, affordable electricity, jobs and even lives.
Despite Uganda’s need for accountability, efforts to amend the PFMA 2015 to remove the role of accountability from accounting officers have been made. Through the Public Finance Management (Amendment) Bill 2015, government sought to make votes such as ministries as opposed to persons (accounting officers) accountable. How can Ugandans hold an institution in isolation of the accounting officers? The challenges we face today require that we make every accounting officer in the different institutions individually responsible for every action they take on behalf of their relevant institutions. This will instill discipline and help to stop officials from signing bad deals.
As it is, it has been difficult to hold accounting officers accountable. I think we can all remember that during the scandal in the Office of the Prime Minister (OPM), the accounting officer -Mr. Pius Bigirimana- who should have answered for the abuse of the public resources in the OPM was glorified as a whistleblower and was rewarded with another ministry, that of Gender, Labour and Social Development. The same officer who failed supervise the OPM officer was given a bigger responsibility to manage Shs. 265 billion under the Youth Livelihood programme in the Ministry of Gender, Labour and Social Development. We have also seen the Minister for energy signing tax exemptions well knowing that the Tax Income Act 1997 grants tax exemption powers to the ministry of Finance. As a result, of the above actions, we lost over 748 billion shillings in one transaction to Tullow Oil. An officer who fails to follow the law must personally take responsibility When we go to the polls in February, let us vote for accountability based on personal integrity.
YOUTH INTERESTS AT PERIPHERY
Talking to youth in the oil region of Uganda and seeing the uptake of oil and gas courses by Ugandan youth, you realize that youth hold high hopes of being transformed by our oil and gas resource. The youth hope to get jobs in the oil and gas sector but to do so, they need to be equipped with skills through education.
Despite this need, we see that Uganda lacks a national curriculum policy for all oil-teaching-institutions. As such, each institution teaches oil and gas courses that they think Uganda’s oil and gas sector needs. There are no guarantees that the skills they provide are relevant for the youth to tap oil and gas sector opportunities.
We also know that the kind of education Uganda is providing to the young under the Universal Primary Education (UPE) is poor; 70 percent of Ugandan P.3 children cannot read, write or count. With poor education, how can our children work in the oil sector?
We need a leader that takes the education and interests of the young and the youth seriously and we should vote that president in 2016.
HUMAN RIGHTS ABUSES
We also need to vote a government that respects human rights including property rights.
I think we all are aware that infrastructural developments for the oil sector including airports, roads, pipelines and central processing facilities are going to require huge amounts of land in places such as Hoima and even the more urbanized and populous Wakiso district.
We need to remember that Uganda has not always respected the property rights of its citizens. For instance, 93 families in the refinery area of Kabaale-Buseruka, Hoima district are still awaiting relocation three years after they should have been relocated. Additionally, majority of the over 1,000 families in that were affected by the Mbarara-Rwanda and Jinja-Kenya electricity transmission lines have not been compensated yet.
Indeed we need to consider many factors when voting for our president in February because as you have seen, our country and our very lives are at stake.
The GPFOG Taskforce is the implementing body of the Guild Presidents Forum on Oil Governance (GPFOG). GPFOG is a forum of youth leaders including university guild presidents, ministers and university students’ associations’ leaders seeking to promote good governance in the oil sector.
Recently, Mr. Honey Malinga, a commissioner in the petroleum directorate, was quoted by the media as having said that land disputes were derailing project implementation in the sector.He pointed out the case of Kabaale parish, Buseruka sub-county, Hoima district, where government acquired 29 square kilometers of land for the construction of the oil refinery and its attendant infrastructures, which saw government being dragged to court by refinery-affected families. The commissioner is reported to have said that the land acquisition process was misunderstood by Civil Society Organizations (CSOs) which resulted in incitement of the residents of the refinery land and a court battle was born. As the organisation that is working to see that the refinery-affected families see justice, we felt that it was important to explain the refinery-affected families’ court battle so as to put Mr. Malinga’s comments in context.
It needs to be noted that the refinery-affected families battling government in court are doing so over low compensation rates and a delay to relocate those that opted for relocation; this delay has had adverse effects on the health, education, economics and social relationships of the people still languishing in the refinery.
ABOUT THE CASE
The refinery people’s case was filed in March 2014. The refinery-affected people, were led by Africa Institute for Energy Governance (AFIEGO), and in addition to the reasons mentioned above, the people challenged the human rights violations arising out of their displacement to make way for the oil refinery. The case was brought under Article 50 which provides that any person who feels that their or another person’s right has been infringed (or is about to be infringed) has a right to go to court for redress. Article 50 (2) gives institutions such as NGOs power to go to court on behalf of anyone whose right has been infringed. A similar provision is found under Article 137, which gives any person the right to go to the Constitutional Court for interpretation of statutes or actions that infringe human rights.AFIEGO fights for the rights of the poor and disadvantaged and when the refinery affected people, who are highly informed of their property rights including the right to fair and timely compensation, sought redress, AFIEGO worked with them to see that they receive justice.As the above shows, CSOs neither misunderstood norincited the refinery affected people to go to court as Malinga reportedly said
WHY SOME PEOPLE REJECTED MONEY
Most of the complainants in the refinery case are those who rejected the compensation money because it did not match the market value as required by law and those who chose resettlement but have never been resettled.These refinery-affected are not the first to reject compensation on grounds that it is low. As the media has reported in the earlier mentioned October 9-10 article, several people have rejected government valuations of their land.
In the case of the refinery-affected people, one needs to note that while the compensation process was ongoing in 2014, government made a bulk purchase of 533 acres of land at Shs 4.2 million. Meanwhile, it had compensated and was still compensating, in 2014, the refinery-affected people with Shs 3.5 million per acre of land. Important to note is that the land government bought was about 15km away from the refinery area.
Where, then, were refinery-affected people interested in settling in areas close to where they had lived going to find land at the compensation rate government had used?
RIGHTS SHOULD BE RESPECTED
While development should be supported, so should people’s rights.Article 26 of the Uganda constitution recognizes rights to property. It is under this article that poor and vulnerable land owners are protected from over enthusiastic “investors” who might think their grand business goals are more important than thelives and dignity of the people who have lived on this land for generations.
To uproot people from their land without compensation is not just a violation of the highest law of the country, it is also inhuman, unethical and fraudulent. As responsible citizens, we should stand up and condemn these threats to rob people, such as the refinery-affected families, of their property in the most vehement of terms. We must realize that it is not coincidental that some people in Hoima and other oil districts have been stripped of their property and have waited for years without being relocated and without any hope for compensation, for some.
Realizing and appreciating that resources in Uganda belong to Ugandans, we must all stand up and protect these resources and the individuals whose property has been taken to develop these resources. Even after people have been displaced to make way for projects, we must follow up on the projects to see if they are delivering the benefits they promised.
The writer is a Programmes Officer with Africa Institute for Energy Governance
On August 18, 2015, university guild presidents under their Guild Presidents Forum on Oil Governance (GPFOG) supported by AFIEGO petitioned the Ministry of Energy demanding that the ministry formulate regulations for the Petroleum (Exploration, Development and Production) Act 2013and the Petroleum (Conversion, Refining, Transmission and Midstream Storage) Act 2013, also known as the Upstream and Midstream laws respectively. the GPFOG members were Read on to understand why this GPFOG petition –GPFOG is a forum consisting of guild presidents, guild ministers and leaders of university students’ associations working for good governance in the oil sector- was important more so at this time.
In 2007, government imposed a moratorium on issuing of new licences to companies seeking to exploit Uganda’s oil. Government wanted to put in place legal, regulatory and institutional frameworks to enable open and efficient operations in the oil sector including bidding and licensing.
The matter of creating a legal and regulatory regime for the oil sector was taken so seriously that in 2011, following parliamentary discussions matters pertaining to the oil sector, including regulating it, the executive was given 30 days to table oil laws before parliament and it was reinforced that no new oil contracts would be signed without oil laws being instituted.
Indeed in 2013 and this year, government put in place the Upstream and Midstream laws and the Public Finance Act 2015, also known as the Downstream law.
To enable implementation of the laws, the minister for Energy and Mineral Development was mandated to put in place regulations for the Upstream and Midstream laws under sections 8(d) and 183 and section 95 of the Upstream and Midstream laws respectively.
Sadly however regulations for Upstream and Midstream laws, which would also enable the operationalization of key institutions including the Petroleum Authority of Uganda (PAU) and the National Oil Company (NOC), have not been put in place to date; regulations for the downstream law, supposed to be formulated by the Ministry of Finance have also not been put in place.
Yet important processes in the oil sector such as selection of companies to bid for oil wells and mapping of land for a CNOOC pipeline from the Central Processing Facility (CPF) in Buhuka, Hoima to the planned refinery in Kabaale-Buseruka are ongoing.
These processes require a sound legal and regulatory regime to prevent negative social, environmental and economic costs such as under or delayed compensation, pollution and destruction of the environment that can arise from oil activities.
To contribute to efforts to create a legal and regulatory framework that will enable Ugandans benefit from their oil in a safe environment where human rights are respected, university guild presidents belonging to GPFOG petitioned the minister of Energy and Mineral Development demanding that she puts in place regulations for the Upstream and Midstream laws; Mr. Clorie B. Irumba, a senior Geo-Chemist and Policy Analyst at the ministry, received the petition on behalf of the minister.
The guild presidents pointed out that oil laws will enable Uganda to safely exploit her oil in a transparent and accountable manner and that PAU is important in ensuring that Uganda licences companies with good environmental records and financial resources to develop Uganda’s oil sector, signs good Production Sharing Agreements (PSAs) and that oversight, transparency and accountability are part and parcel of not only the bidding and licensing process but of the oil sector in general.
The guild presidents demanded that regulations for the Upstream law, when formulated, provide for procedures for application of licenses; address issues of confidentiality of oil information and the production to the Authority of reports, returns and other information among others.
They also asked for the following provisions for regulations for the Midstream law: the process for application of midstream licenses; the licensee’s obligation to make information on the midstream operations under the Act available to the public and the conservation and prevention of the waste of natural resources, whether petroleum or otherwise among others.
Communications Officer, AFIEGO
Written by DICKENS KAMUGISHA
A recent joint communiqué issued during the state visit by President Uhuru Kenyatta, the president of Kenya, by State House, resurrected the debate about how economically sound it is to invest in a refinery in Africa.
How astute is it for Uganda to construct a refinery? If one is to judge by experiences elsewhere, and if one is to consider Uganda’s landlocked nature, limited access to technology and technical expertise, and limited capital for investment, one could safely say that the refinery project is best approached with caution, with Ugandans taking keen interest in how the project intends to benefit them.
Experience has shown that refineries in Africa are dogged by mis(operation), unprofitability and production below capacity. Take Nigeria. The West African country’s four refineries were designed to refine 450,000 barrels per day (bpd).
But because of corruption and poorly-maintained infrastructure, Nigeria’s refineries produce less than half their capacities. Even worse, the oil products from within Nigeria are more expensive than imported ones. They rely on subsidies for competitiveness.
Kenya is another country whose Kenya Petroleum Refineries Ltd (KPRL) produced below capacity until it ceased production in September 2013. The products coming out of KPRL were also reported to be of poorer quality and more expensive. Kenyan oil marketers, who are mandated by law to buy 40 per cent of their fuel products from the refinery, complained about them!
A report by the East African newspaper said that KPRL, which is currently unproductive and is acting as a store for crude oil, “earns an average of Ksh10 million ($111,111) for [storing] LPG, petrol, diesel, dual-purpose kerosene and fuel oil but the amount cannot meet all expenses as KPRL has about 300 employees.”
Refineries in Africa are of small capacities, making them unable to enjoy the economies of scale that large-scale producers such as those operating 11-million barrels-a-day enjoy. For this reason, it has been argued that African countries cannot meet the fuel needs of their citizens.
In our case, Uganda is a landlocked country and because of the long and more expensive supply chain, her products are likely to be uncompetitive on the international market due to the high transportation costs and production.
Refining her products on land, Uganda will also incur extra costs such as those of hiring security and land compensation. It is also important to note that the price difference between a barrel of unrefined oil and that of a refined one is small on the international market.
The price difference is even smaller in Africa where most of the oil producers lack sufficient domestic skills and must rely on expatriates. They also rely on expensive loans to develop the infrastructure where they guarantee returns on investment before assessing the level of profitability.
Why would Uganda invest in a refinery then? It has been said that the refinery puts Uganda in a good strategic position and that it will create 650 permanent jobs. But is a $3bn investment worth investing in when one considers the (mis)operations of refineries in Africa?
Chad is a good example whose 20,000-barrels-a-day N’Djamena JV refinery has not been properly managed. While the refinery began full operations in 2012, these operations have not been without hitches. Chad and China National Petroleum Corporation (CNPC) International have engaged in disagreements over unprofitable prices set by Chad which have led to the N’Djamena JV refinery ceasing operations on occasion.
Chad’s fuel consumers have borne the brunt of ceased production as fuel had to be rationed. Chad even had bigger problems following the World Bank’s withdrawal of funding for the refinery project; the country forked out taxpayers’ money to pay back the World Bank loan while the refinery remained unproductive.
As citizens, we have a right and a noble obligation to demand from the government to present to us her comprehensive plan on how Uganda’s refinery will succeed where other African producers have failed.
What is the economic rationale for investing in a refinery and a pipeline at the same time considering our current low reserves of 6.5 billion barrels? Finally, what should Ugandans expect in terms of economic, social, environmental and human rights befits and trade-offs from of each of the two development options? Ugandans need these answers and much more.
Formulate the local content policy
A report that Total E&P was rejecting Nwoya farmers' produce was recently published by the Daily Monitor. The Total E&P public relations officer refuted the allegations but affirmed that Total EP will only accept foodstuffs that fit their food procurement standards. The question is, which standards are they referring to? This incident without doubt exposes the dire consequences that arise because Uganda lacks a local content policy for the oil sector.
As Ugandans, we appreciate the work government has been doing in the sector specifically the formulation of oil laws. However, there is no denial that there has been delay in the formulation of local content policy for the oil sector. Government needs to fastidiously address this issue because for the past nine years since oil discovery, Uganda has lost a lot of revenues to lack of a local content policy. Read More
By now, you are probably well-acquainted with the fact that the government of Uganda received a pay-out of $250m from Tullow Oil following a three-year tax dispute.
You are also probably aware that this pay-out came as a result of a unilateral decision by the cabinet, allegedly to save Uganda from a total loss to the country; Attorney General (AG), Fred Ruhindi, was quoted by the press saying that out-of-court negotiations between Tullow and cabinet resulted in Uganda getting nearly less than half of the $473m that the Uganda Revenue Authority (URA) had assessed earlier, a decision the Tax Appeals Tribunal had upheld. Why in the world cabinet agreed to this unfair settlement still remains a mystery. The AG is reported to have said that because the case against Tullow Oil was not strong enough, and having had a tax income exemption clause in the agreement with Tullow, government thought they might lose the case against the Irish firm in both the High court and the International Centre for Settlement of Investment Disputes (ICSID). As noted earlier, this reasoning has been greeted with suspicion. In the first place, why did the government accept such exemption clauses in our Production Sharing Agreements (PSAs)? And what steps has the cabinet taken to punish the officials responsible for signing such bad agreements? Nevertheless, Ugandans need to pick a few lessons.
First, they need to realize that the oil sector still faces grave governance challenges of corruption, dishonesty, secrecy, poor enforcement of laws, lack of regulations and weak institutions including parliament, amidst a strong and bullish executive. These must be urgently addressed if we are to maximize the benefits that oil brings.
The executive also has too much power over the oil sector, with these powers unchecked. The cabinet decision to settle the tax dispute demonstrates this. The minister of Energy, who belongs to the executive and cabinet, negotiated and signed oil agreements with oil companies including Tullow.
The executive again sat with Tullow and decided how much the company should pay in capital gains tax without consulting any other organ, including the Parliament.
Remember, in 2010, through a resolution, parliament recommended to the executive that the oil agreements needed to be renegotiated. That advice, however, was flatly rejected.
Again, in 2012, during the debate of the oil bills, the civil society argued that the powers of granting and revoking licenses and negotiating agreements be vested in the Petroleum Authority, as a technical institution, to safeguard the interests of Ugandans. This too, was rejected. As result, all those powers were retained by the minister.
This means that only the executive wields too much power in the oil sector, and this power is unchecked. Ugandans had hoped that section nine of the Petroleum Exploration Development and Production Act of 2013 would be enforced to operationalise the Petroleum Authority to advise the ministers and cabinet on technical matters of the sector.
But again, the government has not yet put an authority in place. Why is all of this bad for Uganda? Uganda, through the use of her oil resources, is aiming to attain middle-income status by 2040. Ugandans also hope that their lives will improve when the country begins generating the estimated $3bn in revenues per year from the oil for the next 30 years.
These aspirations might not be realised if poor governance in the oil sector remains. With unchecked power and lack of transparency, Ugandans have not been availed with agreements signed by the executive and oil companies, which could ultimately lead to more corruption.
Additionally, a technical sector like oil cannot succeed based on political convenience and quick-fixing. Indeed, in the absence of functioning technical institutions such as the Petroleum Authority and the National Oil Company, the situation can only get worse.
The parliament should use its oversight powers to compel government to urgently put in place oil regulations to enhance the enforcement of the new oil laws and operationalize the Petroleum Authority and the National Oil Company in order to separate oil regulation from the messy politics. If we fail to ensure transparency in the sector from the start, we shall regret why we discovered oil.
Dickens Kamugisha is the chief executive officer,
Africa Institute for Energy Governance.
In January this year, the Electricity Regulatory Authority (ERA) declared that it had increased fines to be paid by people who ‘steal’ electricity. Effective January 15, ERA announced that home owners and small-time shopkeepers who ‘stole’ electricity were to pay Shs 350,000 – up from Shs 295,000. Individuals or organisations that ‘stole’ electricity for commercial use were to pay Shs 1.4m, up from Shs 1.1m.
People who ‘stole’ power would also be expected to pay their estimated unbilled consumption on top of the fine. Dr Benon Mutambi, ERA’s chief executive officer, was quoted in media reports saying that the new fines “would discourage power theft and … reduce commercial losses”.Because energy losses are costly, efforts to stop this are laudable. For a country trying to reduce power loss due to theft, news that ERA has increased tariffs by 2.5 per cent becomes paradoxical. According to media reports, beginning July 15, 2015, domestic consumers who have been paying Shs 544.9 will pay Shs 558.4 for each unit of electricity they consume. Commercial, and medium and large industrial users are also going to be paying more money until September this year when power tariffs will be reviewed. Part of the reason people in Uganda ‘steal’ electricity is because it is expensive. Increasing the price will likely drive people such as maize millers, who were shown to be ‘stealing’ most of the electricity they consume, to ‘steal’ more. A 2010 Distribution System Losses and Collection Rates study by Umeme showed that maize millers consumed 15 per cent of electricity, but they stole most of it. Increasing the price of electricity also makes it less affordable. The Rural Electrification Project is trying to ensure that the dismal access to electricity, which stands at six per cent, is increased. The 15 per cent national access to electricity is also too small. As such, Ugandans, especially women and children, resort to unclean energy sources such as firewood and charcoal. As it is already, few Ugandans can afford to cook or even bring a kettle to boil water using electricity in this Yaka era. ERA said that the “foreign exchange factor” led to the increase in the July-September 2015 power tariffs. One wonders why the volatile foreign exchange factor still plays a role in the pricing of Uganda’s electricity.
When Uganda was still highly-dependent on thermal energy, and during the commissioning of the Bujagali hydropower project, high electricity tariffs were blamed on the need to buy fuel to generate thermal energy; the forex factor also played a role in the pricing of Uganda’s electricity because of the fuel requirements for thermal energy. Today, Uganda consumes less thermal energy, making one wonder why Uganda’s power tariffs are still subject to the forex rate. Granted, bad investments such as that of Bujagali mean that the forex rate plays a role in the setting of Uganda’s power tariffs.
But, surely, with the returns on investment for dams such as Kiira and Owen Falls having been paid off, the dollar – which rose to over Shs 3,300 a few weeks ago – should not be a major determinant in the pricing of Uganda’s electricity.
What should the Ugandan government do to ensure sustainable and equitable access to energy? Keeping power tariffs low is one option. Low tariffs translate into fewer energy losses, which leads to lower tariffs, which in turn leads to more people affording power. Instead of using Shs 10bn to distribute energy-saving bulbs that Ugandans can afford, government would best subsidize power. Investing in alternative energy sources such as solar, subsidizing initial costs, is also another solution.This way, Ugandans would be able to use electricity for purposes such as cooking, which would save Uganda’s forest cover and conserve the environment.
On 10th August, the New Vision reported that Chinese firm CNOOC was to start work on their oil pipeline. This pipeline will transport crude oil from the Kingfisher oil well central processing facility in Buhuuka to the refinery in Kabaale. It will pass through over 50 villages. The same report noted that a survey was currently underway to establish the most cost effective route for the feeder pipeline. The survey had caused panic among the residents who expressed concern in relation to losing their land.
Fresh in the Buhuka residents' minds is perhaps the case of the refinery project process that displaced over 7,000 residents of Kabaale-Buseruka in Hoima. Buhuuka village residents have first hand witness accounts of the land rights violations experienced in the refinery area, as they neighbour Kabaale-Buseruka, and as such cannot fail to panic.
Let us talk about the refinery project. The refinery project process is a perfect example that oil infrastructural development processes in the oil sector can have far reaching consequences. In Uganda land is often used to eke a livelihood and when stripped of rights to land, then the ability to make a livelihood is compromised. The aforementioned pipeline developments expose vulnerable communities to losing their only capital.
The acquisition of land for the refinery process was not preceeded by any Environmental Impact Assessment, Strategic Environmental Assessment and Social Impact Assessment. The refinery Resettlement Action Plan was not properly implemented and as a result three years down the road some of the refinery affected people have not been compensated and resettled.
Lack of Social Impact Assessment during the refinery project process resulted in the displacement of over 3,500 vulnerable women. Women are less likely to take risks and as a result, when refinery-affected residents were offered the option of being compensated for their land and property or to be resettled, a number of women chose resettlement. As a result, they are still living in the ghost villages -which the refinery-earmarked-land have turned into- because they are yet to be resettled. Had a social impact assessment been done, perhaps Kabaale-Buseruka would have been rejected as the area to construct the refinery considering that the large numbers of a vulnerable groups in the area.
The refinery project process can teach us a number of lessons. One of them is that social impact assessements are important to prevent making vulnerable groups more vulnerable. Regulations for the Land Act 2010 on compensation, assessment and resettlement, conduct Environmental Impact Assessments, Strategic Environmental Assessments and that social Impact assessments should also be formulated. They should then be implemented so that Ugandans can sfaely enjoy benefits from their oil.
By Aryatwijuka Phillo
Africa Institute for Energy Governance