10 June 2014

Uganda: Govt Earmarks Shs35 Billion for Oil Refinery Compensation

Photo: Amnesty International
(file photo).

Government has earmarked Shs 35bn to complete the acquisition of land for the construction of the oil refinery in Kabaale, Buseruka Sub County, Hoima district. Activities to compensate people in the refinery area started in December last year, but only half of the affected people have received money. There have been limited funds.

"In the oil and gas sub-sector, focus will be towards the implementation of the refinery development activities including the Resettlement Action Plan for the refinery land and the implementation of the oil and gas policy" the paper, which is a more detailed document than the budget speech, reads in part.

Also in the next financial year, government expects to undertake a thorough route survey, a resettlement action plan and environmental baseline studies for the pipelines from the oil fields to the refinery, and also from the refinery to the main storage point at Buloba.

A further Shs 2bn is to be set aside to support pipeline developments; Shs 9bn to establish new petroleum institutions (Petroleum Authority of Uganda, the National Oil Company and Directorate of petroleum); Shs 1bn towards monitoring the development activities of the Kingfisher production license and Shs 2bn for the next round of licensing.

Delayed compensation:

Government last year said by June this year, the compensation exercise would be completed. However, just days to the end of the month, half of the people at the refinery site are yet to be compensated. Bashir Hangi, a communication officer in-charge of the refinery project, last week told The Observer that only half of the project-affected persons who opted for compensation have been paid.

"The land acquisition process is expected to be completed by September 2014," according to a separate statement from Petroleum exploration and Production Department (PEPD).

Hangi said the remaining project-affected persons will be paid as soon as money is available. However, it is unlikely that the remaining group of people will be compensated by September. Hangi further noted that at least almost everyone who had been paid had voluntarily vacated the land and handed it over to the ministry of Energy.

"You need to come down here and see for yourself, almost half of the land is now fully secured; it is vacant," he said.

Kosea Wambaka, the head of party and programmes at Strategic Friends International, a consultancy firm implementing the Resettlement Action Plan (RAP) for the oil refinery on behalf of the ministry of Energy, asked government to expedite the process of compensation. Civil society activists have criticised the way the process has been handled.

A new newsletter by African Institute for Energy Governance (AFIEGO), one of the civil society groups heavily involved in the oil industry, points out that the compensation has been unfair to many tenants.

Those who have vacated the area have done so after being served eviction notices. For instance, the newsletter carries an eviction notice written to one of the affected persons, Ms Jackline Ngamita of Nyahaira village. The eviction notice, dated March 30, 2014, is signed by Wambaka. It advises Ngamita to vacate the land within three months or face forceful eviction.

"You are advised that upon the expiry of 3 months,[from 30 March 2014] the Ministry of Energy and Mineral Development or its agents or assignees shall have the right without further notice assume or enforce vacant possession and peaceful enjoyment of the land," the notice to vacate reads.

However, though Ngamita only received compensation for her developments on the land, since she opted for relocation, she is yet to be relocated.

"Where do they want me to go?" she wonders. At least 96 project-affected families opted for resettlement, while plans for purchasing land for resettlement are in the final stages.


But Wambaka says those who opted for relocation will soon be taken to a new place.

"At first those people thought government would take them to Karamoja. But they are going to be relocated in the same place, just nearby," he said. Government has already identified land in Kyakaboga village, Nyakabingo parish, in Buseruka sub-county, Hoima district, where the 96 families will be relocated. Nyakabingo parish neighbours Kabaale.

Wambaka said the procurement process for the land has already started. Hangi said the ministry of Energy took those who will be relocated there for a tour of the land and many of them appreciated the new site.

"We never wanted to buy the land and then they refuse it. That would have been disastrous," Hangi said.

After acquiring the land, the ministry, through its agents, will conduct a physical plan, survey and construct new houses before resettling the people.

"Whoever will be resettled will get a land title for his or her land," Wambaka said.

Lead investor:

Last week, four of the six shortlisted consortia submitted their detailed proposals to government for the role of lead investor. The four are: China Petroleum Pipeline Bureau (China), Marubeni Corporation (Japan), RT - Global Resources (Russia) and SK Group (South Korea).

Petrofac (United Arab Emirates) and Vital SA (Switzerland) did not submit proposals. Petrofac indicated they were opting to concentrate on their core business of engineering, procurement and construction for the upstream petroleum sub-sector. Vitol SA cited internal reasons among the consortium members.

According to Fred KabagambeKaliisa, the permanent secretary in the ministry of Energy and Mineral Development, the evaluation process is expected to take one month but the leader investor is expected to be announced towards the end of the year.

Robert Kasande, the refinery project manager in the ministry of Energy and Mineral Development, said an evaluation team, comprising of representatives from the government of Uganda, together with government's transaction advisor, Taylor De Jongh, will undertake a detailed evaluation of the proposals this month.

The evaluation process is expected to take one month and after which the results will be announced. Negotiations are expected to be concluded by the fourth quarter of 2014.

"One of the Government's objectives is to select an investor that will develop a refinery to convert Uganda's waxy crude oil into the desired petroleum products that meet set standards", Kasande said.

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