A Proceedings Report from the Bunyoro Regional Workshop on Land Rights that was held at Hoima Resort Hotel April 17, 2015. For more Information.A PROCEEDINGS REPORT ON YOUTH AND OIL IN UGANDA
A report of proceedings from the oil conference that was organized at Makerere University on 16th and 17th April. The conference was organized by the youth who are doing oil courses at Makerere University. It was supported by AFIEGO under her "Youth leadership" project.
A number of people participated in the conference including ministers and other government officials, the Norwegian Ambassador to Uganda and other diplomats, student leaders and other guests totaling to over 190
The main outcome of the conference was a contribution of issues that were later compiled into a memorandum containing views of what the youth want to see in the Local Content policy for Uganda. The memorandum was presented by the youth leaders to the Ministry of Energy and Mineral Development.
In this newsletter, you will read about some of our activities implemented in the month of April 2015 including trainings on issues of oil and land rights for communities along the DRC-Uganda border, youth and their efforts to contribute on oil governance, engagements on the local content policy in the oil sector, our advocacy on electricity governance, engagements on oil and environment and others.
In this newsletter, you will understand and appreciate the local content provisions following reading our article explaining them. You will also read about AFIEGO's appeals to government to emulate Tanzania and make PSAs public and most importantly, you will be informed about the refinery-affected people's case transfer from the Kampala High court to the Masindi High court.
In this issue, you will read about Sustainable Energy for All: can investments through Uganda's Rural Electrification help the poor access clean and affordable energy?, Training to work in the oil sector: the delay to operationalize the local content policy is another frustration for Ugandans, AFIEGO's appeal to NEMA and Parliament to urgently pass the 2014 National Environment Bill into law, Will Karuma electricity become a reality? We would like to remind you that it is always a pleasure having you read The Energizer.AFIEGO NEWSLETTER FEBRUARY 2015
communique on government's selection of Rt global resources to build a refinery, 18th february 2015
Yesterday 18th February 2015, AFIEGO convened a meeting of partners at its offices in Kampala to discuss concerns surrounding the selection by the Government of the company to build the oil refinery in Hoima district. Ugandans will painfully recall that on 10th and 11th October 2011, the national Parliament was recalled from recess and spent two full days discussing the mismanagement in the country's oil sector. Among other things, the Parliament pointed out that the sector was being run based on outdated laws, the Production Sharing Agreements (PSAs) had unfair stabilization clauses, that there were no competent institutions to regulate the sector and manage oil business on behalf of the government and that some government ministers had engaged in bribery to favour some oil companies against others.
After the above discussions with determination to restore transparency in the sector, the Parliament made a number of recommendations for proper governance of the sector including resolutions stopping all oil transactions until new oil laws were put in place and for three ministers (the then Prime minister, the minister for Foreign Affairs and the Minister for Internal Affairs) to step aside to allow investigations.
Unfortunately, the government ignored the resolutions. As a result, in 2012, the government entered into an MoU with Tullow Oil effectively authorizing the sale of two thirds of oil assets in Uganda to CNOOC and Total at a price of $2.9 billion. In effect, the executive connived with the Companies against the Parliament.
The reasons given then by the executive to reject the recommendations of the Parliament were among others (1) that the Parliament had no powers over the executive, (2) that their resolutions were based on speculation and in bad faith and most importantly (3) that implementing the resolutions would delay oil production and in turn, increase the costs for oil operations in the country. Then, many Ugandans innocently believed the government. They did not know that these were acts of impunity and would continue to haunt the sector. It should be noted that nowhere in the world has any country succeeded in managing the oil sector for the common good through undermining institutions such as a Parliament.
Indeed, since the firm down in 2012, a process that was meant to commence oil production, Ugandans have been waiting for the oil production to commence in vain. Instead, they are being fed on endless deadline promises. We are waiting to see how a government that ignored the parliament will implement the upstream and the midstream laws that were put in place in 2013 for the benefit of the citizens. More so, the meeting noted that since 2006 to date, over $800 million dollars have been paid to the government by the oil companies in Signature Bonuses and Capital Gains Tax but there is no information in the public domain on how such revenues are being used. Why is that oil money?
After discussing the current state of affairs in the sector, the meeting made the following observations:
• That using terms such as "preferred" bidder versus "alternate" bidder means that at the moment, there is no absolute winner or loser. The net effect of such terms is to confuse Ugandans. The meeting noted that the selection of an investor for the refinery was long overdue. It is an important step in our struggle to commence production of our oil. Unfortunately, the long time taken was never used to ensure openness and transparency in the process. The partners further observed that the statement by the Permanent Secretary MEMD that if the government fails to agree with the RT Global Resources (preferred bidder) on the final details, they would exercise a second option of going back to discuss with the alternate bidder (SK Engineering and Construction) is a fertile ground for corruption. It means that at the moment, both companies still stand a chance to win. This may encourage them to pay bribes to the usual middle men in order to out-compete each other for the project.
• Lack of production licenses: Today, Ugandans know that it is only CNOOC that has a production license. Total and Tullow Oil have no licenses for their two thirds stake. It is also clear that the government and companies haven't made a Final Investment Decision (FID) due to the absence of licenses and failure to reach a consensus on key issues including the final details regarding a refinery. And practically, there is no way the government can commence the building of a refinery without or without the RT Global Resources in absence of a FID. So, don't fool Ugandans. Perhaps, this is the reason why the government chose to use vague terms such as "preferred vs alternate bidders" which means that they also know that there is no final agreement yet. Indeed, the government cannot announce an absolute winner of a refinery at a time when it is still failing to conclude decisions with the companies that have invested heavily in the discovery of oil. Ugandans as owners of this country deserve to know why the government is taking long to issue licenses and how it expects to build a refinery without a FID. Remember, in 2011, the same government rejected Parliamentary resolutions allegedly to avoid delays but now they are caught in their own game. Ugandans want the truth. Otherwise, deceit will continue to endanger our oil and our country and we may not survive the oil curse.
• The meeting also noted that whether we build a refinery and an export pipeline, or one of the two, without transparency, Ugandans will not benefit.
• That the government should disclose to Ugandans the selection criteria and the capacity of RT Global Resources to mobilize the required over $3 billion to build the refinery or indicate whether the government will take responsibility to borrow the funds for the company through guarantees. This is information is key to facilitate the citizens to participate, demand and monitor the oil sector.
• The meeting further observed that today, Russia is a in a financial crisis due to sanctions imposed on it by the European Union and USA for her alleged support of rebels in Ukraine. That such a country and her companies may find it difficult to successfully borrow from International Financial Institutions such as the World Bank and others to invest in a refinery. So, the government should assure Ugandans that the selection of the RT Global Resources did take into account all the necessary factors, national, regional and global that may affect our choices.
• They also observed that the information from the government to date, indicates that the production infrastructure in the country will require over $15 billion, an equivalent of three quarters of Uganda's GDP. The refinery is among the components of the production that may require the biggest part of the investment. Where is the evidence that the RT Global Resources has the capacity and credibility to mobilize such funds? We hope, it is will not be a case where you have the pigmies from which to choose the tallest person. It doesn't make sense.
• Further, that civil Society in Uganda are not pushing the government to ensure that all oil development decisions are done in the open and with maximum transparency. Slowly, they are accepting to be intimidated by the government. For the citizens, the majority are being preoccupied with the daily struggles of survival virtually with no time or stamina to demand and hold the government accountable. This is the greatest danger of our time. It is unfortunate that most of our fellow citizens have been reduced to begging due to corruption in government that deny them good services.
• They further noted that if China does not build the refinery, it may actually fail to take off for ever due to lack of consensus on the best development option. The decision to build a refinery and pipeline just for purposes of reaching a compromise between the oil companies and the government may in the short term allow the production to commence but it is a big risk. The truth is that, to date, both the government and the oil companies have failed to tell Ugandans with concrete evidence the best development option of the two choices. They want us to believe that a refinery and a pipeline can deliver the same social and economic benefits and tradeoffs. That can never be true. This could be the reason why only CNOOC –a Chinese company was given a license while the rest of the joint companies are still waiting to know their fate. Unfortunately, such approaches may end up creating unnecessary monopolies in our sector with all the associated risks. While we need investors, it should be noted that currently, many of the Chinese companies in Uganda are involved in several project scandals including the $8 billion Standard Gauge Railway. So, allowing such companies to build a monopoly in our oil sector is a big risk.
• More so, the meeting observed that it is possible that companies such as Total E & P, Tullow Oil and others are not interested in a refinery and are not willing to contribute any investment capital and expertise in the refinery project processes. That their position may be the reason why the government is delaying for years to issue them with production licenses. The strategy may be to compel them to accept to participate in the refinery. Unfortunately, running a project such as a refinery based on dishonest tactics rather than consensus cannot guarantee maximum benefits for the citizens.
In view of the above observations, the meeting made the following recommendations for action by the government and other stakeholders in order to maximize the oil benefits for the citizens:
i. Conduct the bidding and all contractual processes for the refinery, pipeline and other oil projects in the open to show the citizens that you are committed to effective transparency.
ii. Make public the criteria and results for the selection and determination of the preferred bidder for the building of the refinery.
iii. Conduct a feasibility study to determine the value for money for investing in two development options as compared to using one option of a refinery or an export pipeline. This should be done before the commencement of any of the projects.
iv. Prepare and put in place a comprehensive medium and long term oil development master plan indicating the total land required for all the oil and other related projects. The master plan should also include how many people are likely to be affected, the routes for all pipelines, how much money is required to compensate the affected people and identify the safe areas to relocate vulnerable communities. This will help the government to plan for land acquisitions in time to reduce negative impacts on the affected communities.
v. The Parliament should use her oversight powers to review and monitor all the oil development processes by the executive before they are signed as contracts to avoid unfair transactions that have continued to undermine all Uganda's big projects.
vi. Urgently, establish and operationalize the Oil Authority of Uganda (OAU) and the National Oil Company (NOC) to ensure effective oil regulation and oil business management in the country.
vii. Urgently, put in place the upstream and midstream regulations for effective implementation and enforcement of the 2013 new oil laws.
viii. Amend the oil laws to legally constitute a national multi-stakeholder group comprised of eminent persons from the government, cultural institutions, religious institutions, elders, civil society and other relevant groups to monitor the operations in the oil sector including contracts, collection and use of oil revenues.
ix. To Ugandans, the Constitution gives you the powers; use it to participate and hold the government and all other actors accountable in the management of the oil sector as a means to shield the sector from current rampant corruption for the benefit of all citizens.
x. To the youth, you are the most energetic segment of the population and most educated, use your numbers, skills and energy to ensure that there is transparency in the management of the oil sector. This way, the oil will generate the necessary revenues to create opportunities such as jobs, quality education, health, clean water, affordable and reliable electricity, roads and others which will reduce your current misery.
xi. To NEMA, urgently, complete the review of the environmental laws to ensure effective environmental conservation amidst oil production activities.
xii. To UWA, urgently, work with the government to put in place strict guidelines for oil operations in the protected areas.
xiii. Lastly but most importantly, urgently, compensate and resettle all the refinery project affected people of Kabaale as a measure to secure the land for the commencement of oil production.
For God and My Country.
Signed by: Africa Institute for Energy Governance (AFIEGO), Centre for Constitutional Governance (CCG), National Association for Professional Environmentalists (NAPE), Ecological Christian Organisation (ECO), Pro - biodiversity Conservationists in Uganda (PROBICOU), Lake Albert Children and Women Advocacy and Development Association, BIRUDA, BUCAWA, Kakindo Orphans, KWATANISA, Women and Youth Associations of Butimba, Kidoma, Kinogozi, Kabaale, Mbiko, Komamboga, Makerere, Mukono, Kyambogo, Nkumba, Bugema and Kigumba.
Contact :Patience Akumu,
Communique issued 30th January 2015
Introduction :The Africa Institute for Energy Governance (AFIEGO) in partnership with Refinery Affected Residents Association organized a half day meeting with the refinery affected people of Kabaale parish, Buseruka sub-county Hoima District. The meeting was organized under the theme: Understanding the nature of compensation from government and the need to defend your property rights. It brought together over 30 refinery affected residents' whose case that was filed in the High Court and is still waiting for determination. The main objective of the case is to compel the government to stop forcing the affected people from accepting and signing for inadequate and unfair compensation and resettle those who asked for land within a period of three months.The objective of the meeting was to discuss the emerging issues in the communities and update the residents on the progress of the case. The meeting followed a visit by officials from the Ministry of Enery and Mineral Development (MEMD) and Strategic Friends International (SFI) - the company working with MEMD to implement the Resettlement Action Plan for the oil refinery which includes compensating the affected people. Following the visit, it was reported in the media that the people who had filed the case had changed their mind and were now willingly signing the compensation documents to receive the money that they had originally rejected.The stories created an impression that the affected people were no longer interested in the case. It is in response to the above stories that AFIEGO and partners organized the meeting in the affected villages to share with the people.
In the meeting, the affected people indicated that the MEMD and SFI were in Kabaale five days ago telling people that they were being given the last chance to sign and get compensation. That if they didn't sign, they would be evicted without compensation after all their case had been dismissed. They also indicated that 2 members had signed on the compensation documents due to unbearable suffering. Their kids had spent over two and half years without going to school, their grass thatched houses had collapsed and many other problems.
In response, AFIEGO lawyers explained to the residents that the case against government was in court for determination and they were working hard to get a new hearing date. The participants were encouraged not to be bullied into signing for unfair compensation but to keep strong and wait for court decision. From the deliberations the participants made the following observations:
1. The government of Uganda is taking advantage of their desperate sorry state, to trick or force the participants to sign for unfair and inadequate compensation which they had earlier protested as a violation of their constitutional right to prompt payment of fair and adequate compensation.
2. The participants observed that it has been more than two years of suffering and uncertainty since the cutoff date in June 2012 when government stopped them from using their land. The people have since not been able to conduct any form of development, including cultivation of perennial crops, depriving them of livelihoods.
3. Further still only two people among those that filed a case against government signed for the unfair and inadequate compensation but this does not mean that the constitutional violations had been addressed. In any case, the people signed not because they liked the compensation but because of suffering.
4. Government is using isolation and misery to force the affected people into signing agreements that violate their rights: The participants observed that even those who signed only did so to save their lives. What some people want now is to minimize the damage by accepting anything from the government to struggle and start a new life.
5. Physical and psychological suffering :Participants noted that those who had rejected the inadequate compensation as well as the ones who opted for resettlement have been isolated and live in bushes .They do not have access to basics like clean water, health centres, schools and markets.
6. Schools turned into police stations: It was observed that the only two primary schools at Nyahira and Kyapaloni in Kabaale had been turned into police stations for the last two months. This ended the little hope they had that the government would rethink and improve the education for their children. They observed that the government was no longer considering them as citizens.
7. Affected people still committed to soldier on in court: Participants emphasized that they are still in court and committed to soldier on until they get justice. They are ready to pay the cost. They are confident that court will give them justice and will protect them from further violations.
8. The participants noted that the move by MEMD and SFI to take the advantage of people's misery and suffering to force them into signing on the agreements that violate the right to prompt, fair and adequate compensation is absurd and unfortunate. It is an assault on the Constitution and every good Ugandan should fight it. That evil will never prevail against right.
After the discussion and appreciation of the challenges affecting the refinery people, the participants made the following recommendations for action:
1. The government of Uganda should respect the rights of the refinery affected people to prompt payment, fair and adequate compensation by immediately compensating them at a prevailing market value for their land and crops and resettle those who asked for relocation.
2. The High Court of Uganda should determine the refinery affected people's case expeditiously because justice delayed is justice denied.
3. Respect for court process: the government/MEMD and SFI should respect the court process by avoiding issuing of statements in the press that people had abandoned the case.
4. The Government should drop the plan to amend Article 26 of the Constitution or any other plan that has an effect of undermining the rights of Ugandans. Similarly the proposed amendment should be rejected by Ugandans as will increase the violations to property rights in the country. Since it is because of the case that now the government wants to amend the Constitution to give herself powers to exercise the powers of compulsory acquisition before payment of fair and adequate compensation.
We shall continue to be at the fore front of defending respect for human rights, and stand with the refinery and other affected communities until they get justice. We appeal to the courts to ensure that cases of human rights are given priority in hearing because they are the core of human dignity.
1. Dickens Kamugisha, AFIEGO
2.Kiwedde Geofrey ,chairperson Refinery Affected Residents Association
In this Issue, AFIEGO showcased the work we do in the energy sector to bring justice to the poor and vulnerable, we put a spotlight on the Oil for Development Program. We highlighted the program's great achievements and show what next should be done to ensure that the laws, policies and other benefits of the program are implemented so that Ugandans can benefit from their oil.