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  • Proscovia Nabbanja 2

    Government Officials Divided Over Tullow’s Farm-Down

    Ministry of Energy argues that the farm-down creates monopoly in the Albertine Graben

    Officials in the Ministry of Energy and Mineral Development (MEMD) and Uganda National Oil Company (UNOC) are in contention on whether Tullow Oil Plc’s farm-down to Total E&P Uganda should be approved, Oil in Uganda can reveal. Read More

  • Works at Kilembe mines in Kasese district resumed 3 years ago after Tibet Hima Industry Mining Company was awarded the concession. Photo from C4MRE

    Government Warns Tibet Hima Company Over Safety Concerns

    Works at Kilembe mines in Kasese district resumed 3 years ago after Tibet Hima Industry Mining Company was awarded the concession. Photo from C4MRE

    The Internal Mines report reveals that the company has so far invested only $ 51 million in revamping the mine but there are no mechanisms of tracking the ‘actual’ investment in the mine

    Technocrats in the Directorate of Geological Survey and Mines (DGSM) under the Ministry of Energy and Mineral Development have ordered Tibet Hima Industry Mining Company Ltd to halt its activities over safety concerns, Oil in Uganda has learnt.

    In the recent Internal Mines Inspection report submitted to Director of Mines, the technocrats noted that Tibet Hima Mining Company flouting all the terms of the concession agreement.

    “We recommend that Tibet Hima Industry Mining Company Ltd  halt mining activities until it has put in place adequate occupational health and safety provisions, which include proper underground ventilation, provision of relevant protective gear to mine workers, safety and precautionary signage in underground workings, a processing plant and in all concession projects,” the report reads.

    “Miners were found working without protective gears which is dangerous to their health and as regards to mining best practices, it was also evident that mining methods being used did not cater for sustainable exploitation of Uganda’s mineral resources,” the report elaborates.

    Tibet Hima Industry Mining Company, a consortium of Chinese companies was awarded a concession to revive the mining activities at Kilembe copper mines, process copper and associated minerals to final products in 2013.

    According to the DGSM technocrats, the findings are based on field inspection of the mine conducted between June and July 2016 and it exhibited that mining operations at Kilembe site is more of a shadow of the previous Kilembe Mines operation described as ‘mechanized artisanal operation.’

    As the regulator of the sector, DGSM undertook on-site inspection of Kilembe mines mainly to appraise concessionaire’s performance in regards to undertakings outlined specifications on the concession agreement.

    Interestingly, the report acknowledges that since signing the concession with Government three years ago, Tibet Hima Mining Company has been able to rehabilitate the cobalt concentrator plant; where they have imported and fabricated on site flotation cells, installed a 1,500 ton per day ball mill and accessory spiral classifier, renovated one of the two existing thickeners and one of the six existing crushed ore bins, and also installed a new vacuum concentrate filtration unit among others.

    The report however states that despite these achievements, the procurement procedures were done without passing through the agreed channels and procurement committees.

    The company committed itself to injecting in $ 175 million to revamp the mines, rehabilitate the concentrator plant by replacing all the floatation cells and replace all the old mills with new modern mills in order to produce more than 24,000 tons per annum of copper in the first three years.

    According to  Alex Kwatampora, the Project Manager at Tibet Hima Mining Company, the report do reflect on the gaps in their activities but they have since rectified the problems.  He explained that the company is going to invest $ 175 million dollars in a phased approach and part of this money ($ 26 million) will go towards upgrading Mubuku hydro power dam from the current 5 megawatts of power to 12 megawatts and finally to 17.6 megawatts.

    “Yes we had some gaps at the time of inspection, but we have corrected them. We have recruited new mine engineers and provided all workers with protective gear in line with the recommendations,” he explained to Oil in Uganda.

    Weighing on the investment, Kwatampora explained that DGSM technocrats’ mandate is to ensure that the company adheres to the technical aspects spelt out in the concession and not delve on the investment since it is not their concern.

    “We write quarterly reports to Ministry of Finance about the investments,” he told Oil in Uganda.

    “People have to understand that this is an old mine, re-opening it is not easy like building a new one, it is costly and requires a lot of time,” Kwatampora said adding that the company is to construct a copper smelter and refinery plant to process copper.

    Tibet Hima Mining Company Ltd will also conduct a comprehensive mineral exploration to increase on the known reserves of 4.5 million tonnes of copper at Kilembe

    The internal report reveals that the company has so far invested only $ 51 million in revamping the mine but there are no mechanisms of tracking the ‘actual’ investment in the mine.

    Among other concerns raised by the report; the company does not have a mine surveyor, a mine geologist as well as a geotechnical engineer to assist the mining engineer in monitoring the underground operations and recommends that it should employ these professional before resuming business.

    “Tibet Hima Mining Company Limited need to be instructed to fast track its undertakings as spelt out in the Concession Agreement, given that it recognizes it is behind schedule and ordered to file audited financial statements for purposes of tracking its investment,” the report recommends.

    Tibet Hima Mining Company Ltd officials however insist that it has rectified the problems and therefore no need to halt its activities.

    This is not the first time Tibet Hima Mining Company has been accused of irregularities. In March 2016, the company was forced to suspend its operations after an assessment report by the National Environment Management Authority indicated that the company’s sewage disposal unit had a negative environmental impact on the people in the area and the river Nyamwamba water streams.

    Whether the recommendation of the technical team will be effected still remains interplay between the technical arm of government and the president’s politics of ‘not fighting my investors’.

    Report by Edward Ssekika.

  • A map showing exploration blocks in Albertine graben - Photo from Tullow uganda page

    Tullow Oil announces farm-down to Total

    Tullow Oil PLC has entered into a substantial farm- down of 21.57 per cent of its 33.33 per cent shares in the Exploration Areas in all the Lake Albert Project licenses in EA1, EA1A, EA2 and EA3A to Total E&P Uganda B.V.

    The London-based company yesterday announced that a Sale and  Purchase Agreement with an effective date of January, 1st, 2017  will allow Tullow retain an 11.76% interest in the upstream and which would reduce to 10% when the Government of Uganda formally exercises its right to back-in.

    “This agreement is based on the transfer of licence interests from Tullow to Total in exchange for cash and deferred consideration to be paid as, and when the Lake Albert Development Project reaches a series of key milestones, and represents a reimbursement by Total of a portion of the Tullow’s past exploration and development costs,” partly reads the press statement from Tullow. According to a press statement issued by Total E&P, this transaction will give Total a 54.9% interest, strengthening its position in this competitive project and paving the way for a project sanction in the near future.

    “Following the agreement on the Tanzanian export pipeline route, this transaction gives Total a leadership position to move this project efficiently toward FID in the current attractive cost environment, while providing strong alignment and a pragmatic financing scheme for our partner Tullow,” said Patrick Pouyanné, Total Chairman and CEO adding that the increased share in the Lake Albert project will bring significant value to Total and fits with our strategy of acquiring resources for less than $3 per barrel with upside potential.

    Aiden Heavey, Tullow Oil Plc Chief Executive Officer (CEO), said the company will remain an active player in Uganda, “Today’s agreement will allow the Lake Albert Development to move ahead swiftly, increasing the likelihood of Final Investment Decision (FID) in 2017 and first oil by the end of 2020. I’m particularly pleased that Tullow’s long-term commitment to and presence in Ugandan is guaranteed by this transaction and that we will remain an active investor in Uganda’s oil and gas sector,”

    He added, “The deal will secure future cash flow for the group from one of the industry’s few truly low cost development projects without any additional cash requirements expected. We will work closely with the government of Uganda, its associated agencies and with Total and CNOOC to move this transaction forward as smoothly as possible over the coming months.”

    The farm down is likely to raise once again tax disputes. Of recent, such disposals have attracted Capital Gains Tax (CGT) which has been a center of oil litigations between government and the International Oil Companies.

    Both companies strongly assert that completion of farm dawn is subject to approval from government of Uganda.

    “Once this transaction is completed, Tullow will cease to be an operator in Uganda but will retain a presence in-country to manage its non-operated position,” the press statement notes.

    The Lake Albert Development Project is a major development which expects to achieve around 230,000 barrels per day at peak/plateau production.

    Report by Edward Ssekika

  • Some of the children in the make shift cap in Rwamutonga. (Photo: F. Mugerwa)

    Bodies pile up as Rwamutonga evictees await Court ruling

    At least 27 people have died from diseases and starvation two years after being violently evicted from a disputed chunk of land in Rwamutonga, Hoima District. Read More

  • A woman 'washes' the powder using water and mercury to extract the gold.

    Uganda is losing money in uncollected royalties and fees-Auditor General

    Uganda has lost at least 4.4 billion shillings (approx.1.3 million dollars) in uncollected mineral royalties in the last five years, according to a report from the Office of the Auditor General (OAG). Read More

  • Uganda's Auditor General, John Muwanga.

    Levy royalty on sand mining and stone quarrying, advises Auditor General

    The Auditor General is proposing that the government starts taxing the commercial excavation of sand and rocks. Read More

  • Refinery Dark Picture

    Uganda in new search for refinery investor

    Three months after RT Global Resources pulled out of negotiations to construct the oil refinery, government has launched a search for a new investor. Read More

  • Energy Minister Irene Muloni

    Finally! Oil companies welcome production licenses

    The Minister for Energy and Mineral Development, Irene Muloni, yesterday issued 8 production licenses to the Joint Venture oil companies. Read More

  • A woman sets up a roadside stall in Kigorobya, Hoima. (Photo: Stephen Wandera)

    Hoima farmers rue shrunk market for their produce

    Demand for fresh produce from the oil camps dropped to a paltry 2,490 kilograms in 2015, from 73,286 kilograms the previous year. Read More

  • Newly-appointed Chairman of the National Oil Company, Emmanuel Katongole stresses a point at the conference. (Photo: Beatrice Ongode)

    National Oil Company gets CEO

    The Board of Uganda’s National Oil Company (UNOC) has appointed Dr. Josephine Wapakabulo as the company’s Chief Executive Officer (CEO). Read More