13 July 2016

Uganda: U.S.$620 Million Sukulu Phosphate Project Runs Into Land Trouble

Photo: Rachel Mabala/Daily Monitor
Furious. President Museveni speaks at a function last year. The President has described the Finance ministry as “a ministry of thieves”.

In 2013, government awarded a mining lease to Guangzhou Dongsong Energy Group Ltd, a Chinese company, to develop phosphates in Sukulu, Tororo district. However, the project is meeting resistance from the locals over land acquisition and compensations.

EDWARD SSEKIKA, in a two-part series, explores the politics of public interest land acquisitions, its pros and cons, and the future of land acquisitions in the country in light of several infrastructure projects.

By his own admission, John Ayoro, is a marked man in Tororo. His crime? Opposing an investor.

"When in August 2014, I went to Rock hotel; I was expecting to negotiate with the investor on how much he was going to pay me for my land and the developments on it. However, when I reached there, I was only told to sign an agreement, whose content I had not yet read," Ayoro narrates.

"I asked for a draft agreement so that I could go and read through before signing, but they labelled me a problematic man, fighting a government project. So, I left in protest. To date I have never been compensated," he explains.

DISPLACED

Ayoro is one of the thousands of people affected by the Sukulu phosphates mining project. So far, at least 124 people in three villages have been displaced to pave way for the mining project. A total of 4,800 people are expected to be displaced by the project in 14 villages covering 26.5 square kilometers in the sub-counties of Rubongi and Osukuru in Tororo district.

In 2013, government awarded a mining lease to Guangzhou Dongsong Energy Group Company Ltd to mine and process phosphates in Sukulu hill, Tororo district into fertilizers and other products.

Once completed, the project is expected to create more than 1,000 jobs and also earn the country billions of shillings annually. The industrial complex now under construction on a 600-acre piece of land will contain a phosphate fertilizer plant with a production capacity of at least 300,000 tonnes per year. There will also be a steel mill with a capacity of not less than 300,000 tonnes per year, a power plant and a sulphuric acid plant with a capacity of 400,000 tonnes annually, among others.

However, Ayoro together with 123 other affected persons that have been compensated and displaced are up in arms against the investor, who they accuse of hoodwinking them into signing surface rights land lease agreements, whose contents they didn't understand.

UP IN ARMS

At the centre of the conflict is the surface land rights lease agreements, spanning 99 years that Guangzhou Dongsong Energy Group signed with different people.

Although the agreements were signed two years ago, the affected persons now claim they were duped by 'middlemen' to sign the agreements whose contents they didn't understand, and they have since realised that they were 'cheated.'

Lucy Onyango, one of the affected persons, accuses Guangzhou Dongsong of using compensation rates lower than the district rates. She claims that the inter-ministerial committee set up by the president and headed by Energy minister Irene Muloni said the surface rights agreements would be for 21 years. However, theirs were for 99 years.

Onyango is illiterate and, therefore, couldn't read the agreements in English. She wants the lease agreement reviewed to provide for 21 years instead of 99.

One of the surface rights agreements of George Okumu, dated August 6, 2014, drawn by ABMAK Associates and Advocates, provides a lease of 99 years unless it is terminated as provided for therein. By signing a 99-year lease, the affected persons argue that the company ignored the advice of Gabindadde-Musoke, the permanent secretary in the ministry of Lands, Housing and Urban Development, dated December 02, 2013.

"Such agreements [for surface rights] are for a period equivalent to the life of the mine and in any case not exceeding 21 years, with the option of a renewal for further period for which the mining lease may be extended. After the expiry of the mining lease, the land automatically reverts to the landowners or their successors," Gabindadde-Musoke advised in the letter.

So, why did the investor ignore this advice?

When contacted, Guangzhou referred us to their lawyers ABMAK Associates and Legal Consultants. Denis Kusaasira, ABMAK's managing partner, defends the lease. He said the investor opted for a lease of 99 years to avoid the headache of renewal of the lease after 21 years have elapsed. He added that the lease is corresponding with the money the investor paid.

Kusaasira said the investor conducted inquiries locally and found out that Tororo cement factory nearby was buying land at Shs 26 million per acre, without compensation for the developments on land or a disturbance allowance. Consequently, Guangzhou contacted a chief government valuer who put an acre at Shs 30 million.

"So, we paid the affected persons Shs 30m per acre of land, added 30 per cent disturbance allowance, bringing the total to Shs 39m. On top of that, we paid for the crops but allowed them to harvest and eat or sell their crops. We paid for the buildings but allowed them to take iron sheets, windows, doors and everything they wanted to take away. So, what kind of fairness do they need?" Kusasira argues.

Kusasira explained that the lease agreement is not cast in stone; it can be reviewed to 21 years but the investor will cut down on the money. He said a 21-year lease cannot cost the same money like the 99-year lease. The problem is the affected persons have already utilized the money and, therefore, can't refund the balance.

The affected persons also complained that under the agreement, Shs 125,000 was deducted and paid to the district land board to convert customary land into freehold. However, although the money was deducted two years ago, they have not got their land titles.

Joshua Byabashaija, a partner at ABMAK, admits that there has been a delay in processing land titles for the affected persons, shifting the blame to Tororo District Land Board. He says all the files were submitted to the land board, but the board claims not to have funds to facilitate its sittings to process the titles. Byabashaija argues that the investor cannot facilitate a government agency to do its work.

Weighing in, Martin Orochi, the resident district commissioner for Tororo, also blames the land board of playing games with the titles.

"I know the confusion is in the district land office. There are some leaders who have their own interests in this project, but we shall sort it out," he said.

COMPENSATION RATES

Vincent Matano, one of the affected residents, also claims that the Chinese investor used compensations rates lower than the approved rates of 2013. He said the 2013 rates were 'fair.'

"At one of the meetings, the former district officials told us if compensation is done on the basis of the 2013 approved rates, then nobody would die poor. But when it came to compensation, the Chinese investors didn't use the district rates; they used their own rates," he complained.

However, Kusasira laughs off claims of meagre compensation rates. Instead, he blames civil society organisations (CSOs) of seeking to become relevant by confusing project-affected persons. He said even when everything is done the right way, CSOs will always find something to complain about. So far, he explains, the investor has spent around Shs 25bn in compensation.

However, Winfred Ngabiirwe, the executive director, Global Rights Alert (GRA), one of the CSOs working on the rights of project-affected persons, disagrees and describes Kusaasira's allegations as diversionary.

"What civil society is interested in is an honest conversation that brings the investor, affected persons and government to a discussion table in a transparent and respectable manner. CSOs do not thrive on community misery," she argues.

Kusasira argues that complaints are based on a belief that compensation is supposed to make affected persons rich.

"The law provides that compensation should be fair and adequate. So, compensation is not supposed to make affected persons rich, neither is it supposed to make one worse off, but restore the person to be able to re-establish themselves," he argues.

Ngabiirwe differs, arguing that much as compensation should not make people rich, affected persons should not bear the burden of development to an extent of being condemned to extreme poverty.

"The phosphates project is a deal for government and the investor. Some government officials and middlemen have seen the project as a blessing, so much to the disadvantage of the ordinary people," she argues.

Kusasira said the 2013 rates by the district were too exorbitant and were not approved by the chief government valuer. So, the chief government valuer came with the 2014 compensation rates for the district, which were used for payment in August 2014.

He said the law provides for a disturbance allowance of 15 per cent for a six-month notice or a 30 per cent for three-month notice. However, the investor gave a six-month notice within which to vacate the land after compensation, but still offered a 30 per cent disturbance allowance.

"There are going to be opportunities for the people in Tororo. You know the Chinese love pork and rice. Who is going to supply the pork? These are opportunities the affected people should now be talking about," he said.

This special report is a product of The Watchdog, a centre for investigative journalism at The Observer.

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