Got Apwoyo sub county is headquartered somewhere inside a tiny structure in Nwoya district, tucked behind the Gulu – Pakwach highway. Turning off at a trading centre is a small road that leads to the quiet two-roomed establishment.
The trading centre, a product of one of the several Internally Displaced Camps during the wanted warlord, Joseph Kony’s Lord’s Resistance Army insurgency in northern Uganda, is littered with grass thatched structures.
The area is fairly cool, it’s the rainy season. Endless tracts of green vegetation are visible are along the highway. Expansive gardens of cereal are visible too. In the background of the sub county office is expansive maize garden. It looks healthy.
The region, having not been cultivated for a long time during the insurgency, has very fertile soils. In fact there are agro-based companies cultivating on very large scale. But beneath the agricultural potential here, lie simmering emotions and a sense of hopelessness.
Mr Openy Ben Latim, the LC3 chairperson Got Apwoyo sub county, is a very bitter man. Nwoya district lies in the Albertine region which harbours Uganda’s oil fields. Across the highway is the Murchison Falls National Park where Total E&P won production licences for oil and gas in the Exploration Area (EA1).
Despite the proximity, Mr Openy is not optimistic at all and says the people are not happy. During the initial oil exploration in the park while prospecting for hydro carbons, locals and leaders did not know what was going on.
“I don’t think we are going to benefit anything. Youth would come from Kampala to work here when we have our own. They used to bring everything from Kampala. Trucks used to bring vegetables for those people yet here we can grow vegetables,” Openy says in a bitter tone.
The explanation that Nwoya district is part of government’s master plan for the oil sector – the standard gauge railway poised to run through the district, a network of roads in the park, feeder pipelines linking to the Central Processing Facility in Buliisa – does not offer any comfort.
In fact, the mention of Buliisa irks him the more. “You see, everything happens in Nwoya but ends up in Buliisa,” he says.
A story is told of how a group of locals once intercepted a truck that was leaving the park because they believed it was carrying crude oil. The truck was one of several that delivered suppliers then to the camps in the park during the exploration.
At Anaka Sub County not far from Nwoya district headquarters, the sentiments are not any different. Mr Opobo Geoffrey, the LC3 chairperson, said it was absurd that oil companies could not give their people simple jobs like security guards or drivers.
“We do have those certified drivers here but they cannot get jobs there,” he said when asked if some of the locals were certified drivers.
“We do not know anything that is going on there in the park. The only thing we know about Total is the scholarships some of our youth get. I so far have four students benefiting, but that is it,” he said.
The now Pakwach was curved off Nebbi district. Mr Okumu Benson is the LC3 chairperson Pakwach Town Council. He too adds his voice saying they do not have information about the oil activities in the district.
In the compound of the town council offices stands a Total – that now has a production licence for EA1 in Murchison Falls – branded notice board. Also a Total branded ‘suggestion box’ is pinned on the main administration block. Mr Okumu says the oil company occasionally pins up general information about developments in the sector but locals interpret it otherwise.
“They usually find their way to the camps and claim they advertised jobs. We wonder where they get that information but it’s because people are desperate. Sometimes they accuse us of hiding oil jobs from them,” Okumu says.
Mr Aguta Jimmy Frank, the Pakwach town clerk, says because of lack of information has misled people. During the exploration stage there was a wide spread problem of land speculation in the Albertine region because of oil.
“People here sold their land at giveaway prices to speculators. Our people were taken advantage of and now they blame the government,” Mr Aguta says. Expectations remain high now that production phase is upon the country. Chairman Okum says they were told at a workshop in Kampala that 13,000 jobs would be created for Ugandans. But there is a catch.
Not all about oil
“This is the time to seize opportunities in the oil sector,” Paul Tumwebaze of Civil Society Coalition on Oil and Gas once told a youth workshop in Masindi. This is a statement that has countless times resonated at numerous oil and gas workshops, the media and conferences under the flagship of ‘local content’.
Whereas several Ugandans have pinned hopes on oil since prospecting started industry stakeholders advise about the immense opportunities available to feed off the value chain of the sector.
While meeting local government leaders, all of whom have been mentioned above, Didas Muhumuza, the ActionAid Extractives Governance project manager, who has immense knowledge of the sector as well, passed on the same message.
Specifically rallying for the inclusion of youth in accountable governance of the oil and gas sector, he reiterated that the industry will not absorb every Ugandan looking to join the sector.
“The decisions government is taking now as we enter the production phase were informed from what has been gathered since exploration started. There is nothing we can change now, but can work within the existing infrastructure,” Muhumuza told the meeting at Got Apwoyo Sub County.
Chairman Openy had endlessly lamented that Nwoya was being sidelined, wondering why the oil pipeline network that will be draining in the Central Processing Facility should be located in Buliisa. Mr Muhumuza was at pains to explain that because Murchison Falls is a protected area much of the activity could not take place there.
While many of the leaders lamented their youth were not equipped to position themselves for opportunities through skilling and training, there are organisations like the GIZ-funded Skilling Uganda that are offering these opportunities. The programme is targeting to skill 8,000 youth in welding, driving, carpentry, electrical which will be on high demand during the production phase.
ActionAid Uganda under the Extractives Governance is rolling out a two-year Ford Foundation supported intervention to sensitise youth and build their capacity to gain an understanding of the extractives sector and use their knowledge to engage state and corporate actors in the accountable management of the sector. The project focuses on four Albertine districts of Hoima, Buliisa, Nwoya, Nebbi; and Mubende district.
Fortunately some of the leaders are not hopelessly waiting for the magic bullet. Mr Shaban Kinobe. LC3 chairman Panyimur Sub County said everyone is looking at oil whereas opportunities are abound in the value chain. Many of the leaders however expressed optimism about the new project, “People in Power; Influencing People in Power.
Kawunde Patrick has been in the gold mining business for three years now. Previously he was a timber dealer and before that he traded in South Sudan until unrest broke out. On the fateful morning of the Mubende mines eviction, he watched in horror as his livelihood was swept right from under his feet.
The 35-year old father of five had a pit in the mines. On that fateful morning his boys were already in the pit working when he was ordered by angry soldiers to get them out and ensure no one stayed down. The miners had been given two hours – though most swear it was hardly an hour – to vacate the mines. Pandemonium reigned as over 50,000 people gathered whatever they could to flee.
Preoccupied with getting his boys out of the pit Kawunde had no time to pick anything from his house. By the time he got there the padlock was broken, his house ransacked.
“Soldiers stopped me from taking anything. I lost three generators; three blowers that supply oxygen down the pit and four drilling machines,” Kawunde painfully narrated his ordeal.
He valued the generators at Shs3million each; two blowers at Shs2.2million each and a smaller one at Shs700,000. The drillers together cost Shs4.4million.
“I watched as Sh16million of my capital was snatched out of my hands,” he said resignedly with tears welling up in his eyes. A week later he found out his Sh9million ball mill had been taken too.
“In my lifetime I have never seen anything like this,” he said in a distant voice.”
Mr Kawunde is just one of many artisanal miners that lost property and money during the eviction.
“People left money in their houses as they fled,” said another miner who identified himself as just Alex. Alex was one of so many business people who fled off the gold value chain. He owned a lodge and bar. He had just spent Shs6million on iron sheets to construct more makeshift rooms. Like many others he left his iron sheets in the mines.
“If I had not bought those sheets I would at least have something to start with. I left everything of mine in the mines. I have not changed clothes since we were evicted,” he said.
Another miner of Rwandese origin had his Toyota Premio confiscated by police when he was asked to produce his national ID which he had misplaced in the fracas.
Led by Ntare Sipriano, the LCI chairman Lujinji B, an angry group of miners still camped in the trading center just outside the mines said the military men told them they had orders to take over the place and confiscate everything.
“A few lucky ones had managed to get out some property before the place was put on lockdown,” said one of them.
To the ordinary eye artisanal gold miners spend day in and out torturously excavating stone and go through strenuous means to extract gold from the ore. Yet in fact the clueless miners are counting losses since their eviction early this month. Clueless because every government stakeholder they believed had given them assurance of their continued operations right from the fountain of honour has betrayed them.
Mr Bukenya Michael, the Bukuya constituency MP, said they had ‘done everything possible’ to stop the evictions, lobbying in higher offices but were powerless to stop anything.
In his State of the Nation address of 2015 President Museveni assured the miners in Mubende their plight would be addressed. For five years now the miners have waited for a location license in vein. This year, with the eviction looming, negotiations were ongoing as politicians shuffled between State House and Mubende.
Mr Emmanuel Kibirige, the secretary Singo Artisanal and Small Scale Miners Association said Benny Namugwanya, the Woman MP Mubende, was supposed to have given them feedback from a consultation meeting she had attended in Kampala over their plight. Other than what had transpired they were expressly evicted albeit earlier directives to vacate that they mostly took casually.
“We have lost our lives and livelihood. Our government has done it again to further marginalize the poor. Thanks NRM. Our property worth millions is in the hands of soldiers. Only two hours to shit items after working for ten years,” Kibirige says bitterly.
Kibirige wondered what would become of people’s property as there wasn’t any sort of documentation taking place.
“I have an acre of land I bought in that place and have a land sale agreement for it. What has it got to do with the mines? We would not have refused to leave the mines but should have let us take our property,” Kibirige, who sustained a broken leg in the fracas, says.
After years of toiling several of the miners own pits. Inclusive of paying rental fees to landlords, hiring generators and drilling tools, and labour, operating a pit cost up to Sh500,000 daily, according to Ivan Kawuma, another miner. Kawuma owned a pit more than 300 feet deep after working for more than five years.
What has however left several people baffled is their machinery that they were using in their operations. People were not allowed to take their machinery. Miners have also reported seeing a military police truck driving out of the miners with generators, blowers, and other equipment like drillers.
When asked about people losing property Mr Byaruhanga Patrick, the district police commander Mubende, said those were exhibits to adduce as evidence of illegal mining otherwise people had managed to carry out all their other belongings.
For now the miners are waiting and hoping that they will be allowed back to operate or at least seize opportunities if an investor starts operations.
By Robert Mwesigye and photos by Josephine Nabaale
The Petroleum Fund currently has $ 72 million dollars and Shs 10bn on its Shillings account instead of the $709 that was collected
At least Shs 2 trillion oil revenues has already been spent on infrastructure and other energy projects, a report of the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) reveals. However, the report adopted by parliament last week, does not give details of how and where the money was spent, but the Secretary to the Treasury in a letter, states the money was spent on the construction of Karuma hydro power plant.
One of the terms of reference for the Committee was to establish all revenues received in the Petroleum Fund. Accordingly, during the investigations, the Committee requested the Office of the Auditor General (AOG) to conduct a special audit to establish all revenues received by government in respect of the Petroleum Fund. After the audit, the report notes, it was discovered that so far, government received $709 million dollars in petroleum revenues between 2011 – March, 2017.
“The Committee established that a sum of $709 million dollars which has been ring fenced for infrastructure and energy development, accrued to the sector since petroleum activities started,” the report reads in part. However, as at 14th March, 2017, the Petroleum Fund had only $ 72.5 million dollars on its dollar account and a paltry Shs 10bn on its Shillings account.
“Out of this, $633.7 million dollars (approximately Shs 2.2 trillion) was transferred to the Consolidated Fund [and spent on Karuma hydro power project] while the sum of $72.3 million dollars is being held in dollar account and Shs 10bn Shillings account in the Petroleum Fund.
The Committee report reveals that by the time the Public Finance Management Act came into force in February, 2015, the oil revenue account in Bank of Uganda had a total of Shs 1.36 trillion, which was transferred to the consolidated fund.
In the report, MPs question, why Shs 1.36 trillion was transferred from the Oil Revenues Account in Bank of Uganda to the Consolidated Fund, instead of transferring it to the Petroleum Fund as required by the Public Finance and Accountability Act, 2015, as the fund’s opening balance.
However, in a letter dated June, 24th, 2015, jointly signed by Mr Keith Muhakanizi the Secretary to the Treasury and Mr Lawrence Ssemakula the Accountant General, and seen by our writer, the duo directed the director in charge of Banking at Bank of Uganda to transfer the money, close the account and open a new account in the name of the Uganda Petroleum Fund.
“Prior to the enactment of the PFMA [Public Finance Management Act, 2015], the oil funds on account were earmarked to support the financial year 2014/2015 budget for Karuma hydro power plant, and were released from the consolidated fund and thus need to be refunded to the Uganda Consolidated Fund (UCF),” the duo wrote and further explained, “In order to operationalize the Petroleum Fund, there is need to open bank accounts for the Fund, where all oil revenues received by government from 6th March, 2015 shall be deposited. I authorize you to open a Uganda Shillings (UGX) and dollar (USD) accounts in the name of Uganda Petroleum Fund.”
According to the letter, the principal signatories to the Petroleum Fund are; Mr Keith Muhakanizi, Mr Patrick Ocailap (deputy Secretary to the Treasury), and Mr Lawrence Ssemakula, the Accountant General.
“The Committee recommends close monitoring and supervision of the activities of the petroleum authority and the Uganda National Oil company Limited. The relevant committees of parliament should receive quarterly reports from the Authority and National Oil Company,” the report recommends.
In January, 2017, the Committee chaired by Hon. Abdul Katuntu (Bugweri MP) was tasked to investigate the controversial Shs 6bn reward to 42 government officials for winning a tax dispute between government of Uganda and Heritage Oil and Gas Limited an arbitration tribunal in Landon in 2015.
The gist of the investigation was to establish the legality of the Shs 6bn rewarded to 42 government officials for their effort in winning a tax arbitration case between government of Uganda and Heritage Oil and Gas Limited in Landon.
In 2010, Heritage Oil and Gas Company Limited sold its participating stake in the Albertine Graben to Tullow Uganda Limited at $ 1.45 billion – a transaction that attracted Capital Gains Tax. However, Heritage objected to tax assessments in the Tax Appeal Tribunal and also initiated arbitration proceedings in Landon against government of Uganda under the United Nations Commission for International Trade Law Arbitration Rules, 1976. The company sought a refund of all monies collected as Capital Gains Tax.
In February 2015, the tribunal dismissed Heritage’s application and awarded government of Uganda $ 4 million dollars in costs incurred in defending the application. The committee established that government hired Curtis Mallet – Provost, Colt &Mosle LLP, a British law firm to represent government of Uganda in the arbitration proceedings at a cost of $8.6 million dollars.
Following the victory, the President acting on a request from senior government officials rewarded the 42 officials with Shs 6bn for their contribution.
The committee observes that the selection of the beneficiaries was not all inclusive. ‘For example, Bernard Sanya, the initiator of the tax two assessments was neither on the first list nor the second list of the beneficiaries. According to the report, there was a lot of informality and arbitrariness in the selection of beneficiaries.
“The committee concluded that the Shs 6n reward was contrary to standard practices of rewarding public officers, as provided for in the law. The President’s approval of the Shs 6bn was bonafide. However, it was an error of judgement,” the report reads.
The Committee recommended that all funds paid out of URA account to beneficiaries of the “handshake” should be refunded and all officers who flouted the law should be held accountable.
Responding to the report, Ali Sekatawa, Assistant Commissioner for Litigation, one of the beneficiaries of the handshake threatened to petition court over the report, arguing that the Committee selectively evaluated evidence before it, and thus came to wrong conclusions. He said parliament has no powers to order him to refund the money, since it was not given parliament. It came from URA’s account that had been appropriated by parliament. Parliament unanimously adopted the report.
“The Committee further established that whereas the costs awarded to URA by the Tax Appeals Tribunal and the High Court of Uganda has not been taxed and recovered, up to approximately $ 15 million has not been recovered. The bill of costs is yet to be filed. The International Arbitration Tribunal in Landon did award Government of Uganda costs amounting to $4 million which also remains unrecovered,” the report reads in part.
The report asks the Attorney General to recover the $ 4million dollars as costs awarded by the arbitration tribunal within 90 days from the date of tabling the report. However, Ali Sekatawa says it will be difficult for government to recover the costs from Heritage Oil and Gas Limited, since the company was delisted from the Landon Stock Exchange.
Following the revelations by former Energy Minister, Syda Bbumba, that she signed the Production Sharing Agreements (PSAs) without reading through the agreements, the report recommends that politicians should be barred from signing such agreements.
“Parliament should revisit section 8 of the Petroleum (Exploration, Development and Production) Act, 2013 with a view of amending it and provide for technical people to be signatories to PSAs. All recoverable costs incurred by oil companies should be submitted to parliament quarterly,” he report reads.
Weighing in on the report, Odonga Otto (Aruu MP), said “The good thing we have a report adopted by parliament, so even if it takes 10 years, the beneficiaries of the handshake will refund that money” he said.
By Edward Ssekika
President Yoweri Museveni on Monday commissioned African Gold Refinery Limited; the first State of the Art refinery in Uganda and East Africa region.
The facility, located in Entebbe, Wakiso District is 45 kilometres from Kampala and estimated to be worth $20m (about 72 billion Shillings) has been operational since 2014.
Speaking at the launch of the refinery, President Museveni urged government officials to get rid of wrong policies such as taxes on prospective investors if the mineral sector industry is to get a shot in the arm.
“I highly commend the management of AGR limited for bringing the company to Uganda. Africa produces a lot of gold but has so far attracted less of the same industries. I am calling on Africans to wake up and utilize the untapped potential,” President Museveni said.
The refinery will have a capacity to refine raw gold to 99.9% pure gold and the raw material is expected to come from different countries across the region.
According to Global Witness, an International transparency watchdog, some of the raw gold exports are likely to be from Congo and South Sudan, raising concerns over conflict minerals.
“Uganda’s gold sector is shrouded in mystery. You have to ask who is really benefiting. The gold trade was worth $200 million to the Ugandan economy last year but there are no official figures on where the gold came from or where it is going,” said George Boden, a campaigner at Global Witness.
“This raises serious questions about whether gold that may have funded conflict and human rights abuses in (eastern Congo) and South Sudan could be entering the international supply chain and whether the right taxes are being paid.”
According to Tony Goetz, a Belgian gold trader and AGRL’s main investor, the gold refinery will serve a critical role in the mining industry across the region and will employ about 75 Ugandans and with a capacity of 300kg of pure refined gold in a week and ability to increase it to 500kg.
“The refinery contains a geo chemical laboratory with high sophisticated equipment like an atmoic absorption unit. This is very vital since it traces most of the elements in the soil samples,” he said.
However, the chairman of the gold miners in Mubende District, Mr. Mark Jombwe, said the news of a gold refinery does not exactly excite them unless their operations are legalized.
“As artisanal miners, all we care about is licenses to operate legally and because of uncertainties, we cannot invest much in our operations as we are not sure of what lies ahead,” he told Oil in Uganda.
Though gold mining in Uganda is largely on small scale, the country serves as a transit point for gold exports from neighbouring Democratic Republic of Congo (DRC), which has large reserves.
Uganda has been keen to attract investors to its mining sector after government surveys established the existence of minerals including gold, base metals, uranium, rare earths, iron, titanium, vermiculite and diamond in various locations.
Report by by Robert Mwesigye and Collins Hinamundi
Is a rock found in your land a mineral and therefore vested in the State?
A family in Oyam District has sued the Government of Uganda and Sino Hydro Corporation Ltd for unlawfully crushing ‘its’ rock into aggregate and using it to construct Karuma hydro-electric power dam without compensation, Oil in Uganda exclusively reveals.
In the suit Etot Paul and others Vs Attorney General and Sino Hydro Corporation Ltd, filed in 2015 in the Land Division of the High Court, the family of Mzee Etot wants court to compel Government and Sino Hydro Corporation Ltd – a Chinese company constructing the 600 megawatts Karuma dam, to pay for aggregate derived from the family rock.
According to the family, it all started in 2012, when the Ministry of Energy and Mineral Development decided to compulsorily acquire land near and around Karuma to pave way for the construction of the dam.
“Part of Mzee Etot’s land was among parcels that government acquired for construction of the dam. However, government only assessed the value of the land and development on it without taking into consideration the value of the rock on the land,” family spokesperson told Oil in Uganda.
The family claims that since it owns the land, it also owns the rock on the land, and therefore deserves compensation for the value of the rock.
“Consequently, government unlawfully took over the family’s parcels of land adjacent to river Nile, and handed it to Sino Hydro Corporation Ltd for the construction of the dam,” the plaint reads, further noting that part of the land which also contains a rock is also their property.
Through their lawyer, George Omunyokol, the family claims Sino Hydro Corporation brought a rock crusher and crushed the rock into aggregate that it is using to construct Karuma hydro-electric power dam free of charge.
Omunyokol argues that stones and rocks are not minerals and therefore government should compensate the family for unlawful use of its rock.
“The stone/rock in our clients land is not a mineral because the Constitution excludes it from minerals,” he states in the plaint.
Omunyokol’s argument is premised on Article 244(1) of the Constitution of Uganda that vests the entire property in and control of all minerals and petroleum in government on behalf of the Citizens.
Article 244 (5) of the Constitution excludes clay, murram, sand or any stone commonly used for building or similar purposes. “So, clearly, the Constitution is clear, it excludes stones from minerals,” Omunyokol told Oil in Uganda.
Consequently, the family hired professional geologists to quantify the value of the rock and according to the technical evaluation report seen by Oil in Uganda, puts the value of the rock at $ 6.5million (approximately Shs 22 billion).
According to the geologists, the rock has capacity to produce about 650,000 tons of aggregates. Therefore, at a market value of $10 (about Shs 33,000/=) per ton, the rock is worth $ 6.5 million (about Shs 22bn). Therefore, in the suit, the family wants court to order government to pay $ 6.5 million in compensation.
In addition, the Chief Government Valuer conducted valuation of the entire family property which includes; the value of crops, buildings and land to worth 813million Uganda shillings. These monies have not been paid to date.
Oil in Uganda has established that government withheld payment of the compensation, due to the standoff over the rock.
The family seeks a declaration that the actions of Sino Hydro Corporation quarrying the family’s rock, crushing it into aggregates and using the aggregates for the construction without compensation is unlawful and unconstitutional and seek compensation for the value of the crushed rock at the market rate.
However, the Attorney General, in a Written Statement of Defense to the suit, insists that a rock is a mineral and therefore vested in government and the family is not entitled to any compensation so court should dismiss the suit with costs.
“In respect of the claim for compensation for the rocks found on the suits, the plaintiffs [family] are not entitled to compensation in view of the provisions of the Constitution read together with various provisions of the Mining Act 2003,” the AG argues in the defense.
According to Andrew Karamagi, the legal argument by George Omunyokol is sound since rock is part of land and is not a mineral, hence its value should be factored into the computation for the final value of the said piece of land.
“There is a Latin maxim about land which argues to the effect that cujus est solum ejus usque ad coelum (translated to mean- he who owns the land owns everything above and below it). In mutatis mutandis with the Constitution of Uganda which precludes minerals, it is clear that this rock is on the land and is therefore part of the impugned land,” he told Oil in Uganda.
Last year, Uganda National Roads Authority (UNRA), was embroiled in wrangle with businessman Pius Mugalaasi, over the value of a rock on the Entebbe- Express highway on his land. The Roads Authority was eventually forced to divert the road.
The value of rocks found on land is becoming an issue given the demand of aggregate for various on-going projects. If for instance the court rules that a rock is not a mineral, and therefore a property of the land owner, even when exploited for commercial purposes, will set a precedent that could raise the value of rocky lands.
Report by Edward Ssekika.
In this part two of our artisanal miners’ series, we delve in the lack of a clear tax framework to generate revenues for local governments from artisan mining activities. We analyze the potential amount of money local governments could generate, but are currently losing from Gold mining operations.
The Mining Score Card recently launched by ActionAid Uganda in partnership with Africa Centre for Mining Policy (ACEMP) and National Planning Authority (NPA) revealed that there is a weak reporting practice in the mining sector.
It also revealed that even though the mining sector has a great potential of contributing to economic growth and poverty alleviation in the country; less has been done to harness this.
The office of the Auditor General last year revealed in his Value-for-Money Audit report 2016 that government had lost at least 4.4 billion shillings (approx.1.3 million dollars) in uncollected mineral royalties in the last five years.
Currently, the government has embarked on undertaking review processes to update the relevant mining legislations. A Draft Green Paper on Mineral Policy is before the cabinet for review and the review of the Mining Act 2003 is yet to commence.
One of the proposed amendments is the regularization of artisanal mining in Uganda to legally recognize them; integrate them in formal tax arrangements; enable them qualify for social goods, services and infrastructure and to increase revenues to local governments for proper managements. The consequences of under-regulation of artisan miners have wide ramifications and are far-reaching. It includes artisan miners not having access to social goods, services and infrastructure put in place by government; not being taxed appropriately; being prone to machinations by unscrupulous individuals in authorities; local governments not being able to realize their revenue collection targets; and being exposed to crime and conflicts.
The lack of clear sub-national taxation arrangements for artisan miners and utilization of revenue collected from artisan mining is denying local governments of much needed revenues. This is mainly not due to policy or legislative deficiencies, but more due to policy implementation and legislative enforcement. Busoga region is rich in mineral resources particularly Aluminous clays, yttrium, and rare metals such as gallium and Scandium estimated at $370 billion (about Shs942 trillion) by Kweri Investments, the company conducting Feasibility studies in the region. This wealth as mentioned in Part one; has attracted an influx of immigrants from all over the country and as far as Kenya who hope to tap into these resources.
According to Methuselah Batambuze, Community Development officer Buddaya sub-county, the population at Nabwala mining site before the influx was about 2000 and the indigenous people were into agriculture. He however noted that in 2015, with the discovery of gold in that area, the population increased to over 10,000 people.
Batambuze adds that when the miners were convinced that gold was ‘finished’, some left in search for new mining sites.
“What you are seeing now are trucks taking the tailings to other places where they are processed using cyanide for better results,” he told Oil in Uganda
Majidu Musisi, who took part in the first exploration and exploitation for gold in the area in the early 1990s, says he has been at it for now 10 years and has made on average 4 million shillings a week on bad days and over 20 million shillings on good days.
“I have invested in real estate and own more than 5 commercial buildings in Bugiri Municipality,” subdued Musisi reveals to Oil in Uganda.
‘I have also created employment for all these people you see in this mining site,’’ he added pointing to hundreds of youth digging for gold around the site.
A simple analysis of the money made by Musisi in one week; at a conservative estimate of UGX 4 million a week, he makes UGX 16 million a month and UGX 192 million a year. He then shares this money with the people he has employed which to our surprise do not even add-up to 50% of the money Musisi earns. A miner who works at the pit is paid a minimum wage of UGX. 25,000 a day. This money is not taxed because Musisi, like other artisanal miners, are still regarded as an illegal miner.
According to the Mining Act 2003, royalties are to be shared with mineral producing districts based on a basic revenue sharing schemes. The Second Schedule to the Mining Act stipulates that the central government is to take 80% of royalties collected and then distribute the remaining 20% as follows; 17% to “local governments” and 3% to “landowners or bona-fide occupants of land subject to mineral rights.”
This presupposes that central government would first collect the royalties before the local government can benefit from the contribution, implying that local governments do not have the right to tax/ collect the royalties. This is undermining revenue generation and social goods and services delivery at local government level. A failure on the part of central government to collect the royalties on time in the right amounts and distribute them accordingly to the beneficial local governments further worsens the revenue situation at local level. Consequently, local governments suffer financial deficiencies and stress.
The above cited revenue sharing scheme is common in mineral rich jurisdictions and therefore is a widely acceptable practice. However, whether it is the best practice for central government to first collect the royalties and then distribute them to the respective beneficiary district is not clear. We do appreciate that it is good practice to recognize the rights of landowners and bona-fide occupants of land where minerals are discovered and exploited. It is our opinion that local governments are given right to collect royalties and deduct what is due to them and remit that due to central government.
Our rough calculation indicates that if this money would, however, be taxed and royalties deducted, the district is to take 10 per cent of the revenues in royalties and it would generate about UGX. 19 million to its budget. This revenue contribution would be just from Musisi and assuming there are 100 other miners in Bugiri district making the same amount of money, it would be UGX. 1.9bn hence make significant contribution to the district budget.
According to the Bugiri district Budget Framework paper 2016/2017, the rest of the district’s UGX 21 billion shillings budget comes from government and donor programmes.
Interestingly, Musisi has never paid a single direct tax from the income derived from the sale of his gold to the ever available gold trading middlemen.
Just like in other mining areas Oil in Uganda has visited, the roads to the mining area where Musisi operates are impassable during the rainy season.
“If you are not round here and you want access my mining area, you cannot access it when you are not driving a four-wheeled car,” he warns.
Sadly, even the basic amenities like a pharmacy or clinic are not available for the miners who work there.
Some of these things would be solved through paying royalties as District revenues would increase.
According to Shafic Butanda, the Acting Community development Officer Bugiri District, in the more than 10 years small scale miners have been in Bugiri district, there has never been any contribution to the district budget from them ‘’Even right now we are going for a budget meeting but the briefing papers have mentioned the potential revenues that could be collected from gold mining’’ He adds.
Unfortunately, there has been no government plan to formalise Small scale mining in the country. And in Bugiri district there is no scheme to collect royalties since the law gives those powers to collect revenues to the government, which then shares with the district, the district officers say they were not even aware they could collect taxes from the small scale miners. Mr Shafic Butanda the Acting Community Development Officer says ‘’they will start looking into ways of raising money from the miners’
However, even in this, there appears to be an attempt to raise royalties from small-scale gold miners in the Neighbouring district of Namayingo, where according to the Banda Subcounty Chairperson Oguttu Bonaventure, they collect some ‘’little’ money from the miners at Nakuddi gold mining site. “What we collect is based on the same rates as the trading license for the shops in the sub-county which is still little money,’’ he says.
A Case study on revenue sharing schemes in the mining areas of Kabale and Moroto districts commissioned by Transparency International Uganda in 2015, found that while the districts complained of lack of information and erratic payment of their royalties share from government, even government itself doesn’t have enough information and depends on the disclosures of the miners to collect royalties, which in the case of small-scale miners is nonexistent.
This is because small scale miners are usually individuals who rent portions of land for mining from an individual, with an agreement to share what is found on the ground, this is what happens in Nabwala Bugiri district and Nakudi in Namayingo district. Taxing individuals has always been hard and there is an effort by various civil society organisations including ActionAid Uganda to help small-scale miners in Uganda form associations, help them acquire mining licenses and formalise their relationship with government.
This turn of events according to Mr Shafic Butanda, Community Development Officer of Bugiri district will prompt the district to look at creating a mining policy modelled on the National mining policy ‘’Maybe that way we can also help our people benefit from the minerals in the district,’’ he says.
We recommend that local governments are given right to collect royalties and deduct what is due to them and remit the rest to central government. This way local government will not starve of revenues.
Report by Collins Hinamundi Oil, Gas and Land reporter
With red dust all over his body, a short well-built man, probably in his 40s steps out of a 50-foot pit, to speak to Oil in Uganda on his mining journey.
His name is Majidu Musisi, Chairman of Nabwala Gold Mining site in Budde, Bugiri district which has over 500 small scale gold miners. Musisi works with his wife, Nekesa Beatrice and together, they brave the pits and tunnels below the ground in search of the ever elusive gold rocks.
‘’I have been mining gold in this area since 2006, and even though other people have left with the belief that gold is done, I still think we can find more if we dig further into the ground ‘’ Musisi says.
In his search for gold, Musisi uses rudimentary tools like a hand-held pick axe, shovels, and hoes. Quickly, he rather adds that he knows that he needs protective gear like a helmet for his head and gloves, nose-masks and gumboots for his hands, nose and legs to protect him from getting into contact with mercury during washing and amalgamation process.
“These protective gears are expensive to buy,” he says, adding that they prefer to use bare hands and purchasing gloves, gumboots and nose-masks will ‘economically’ take him back.
“If we were using excavators, it would be different.”
It is a common sight to find men, women, and children searching for gold from a mixture of soil, water, and mercury. However, while the local miners crave mercury to help them get gold, they are also inviting ill health that could cause death with the same measure.
According to the World health Organization (WHO) exposure to mercury is the biggest cause of health hazards facing Small scale or artisanal gold miners. The UN organization says in a report on the Health effects of Mercury that due to Mercury’s effects, children and women of child-bearing age are considered vulnerable populations because it says mercury can be passed from a mother to her unborn child.
And yet at gold mines in Namayingo district, eastern Uganda, mercury is one of the vital possessions every miner must have. The liquid chemical is highly sought after as they apply it during the process to extract gold from dust dug ground from the Gold rocks in the mines.
Dr. Joseph Gyagenda of Nsambya hospital last year told Oil in Uganda that mercury was a heavy metal that could not easily be absorbed by living organisms, including humans and could cause permanent mental disability and a range of other conditions.
A walk around Nabwaala mining site, deep open-abandoned pits are littered all over the place; often with no kind of forewarning of probable accidents and some pits obscured by thickets.
Because of the rudimentary methodology, mounds of tailings stand at several meters high overlying on the edges of the pits that are sometimes more than 50 feet deep.
On a rainy day, accidents are imminent as the loose earth simply collapses into the pit, nostalgic Lubanga Ronald states.
When digging tunnels into the ground, there are no re-enforcements on the walls of the tunnels. This, according to Batambuze Methuselah, the Community Development officer of Budhaya Sub-county can make the walls collapse during the rainy season.
According to Musisi, four people have lost their lives after pits collapsed on them. In Nsango B gold mining site in Namayingo district, two people lost their lives in the same way in 2015.
“People here just mine and if they find no gold, they abandon the pit and start digging another one without filling the hole created,” Musisi narrates, adding that even stoarge of tailings has become a challenge in the area.
In Uganda, artisanal and small-scale mining has for years been recognized as illegal and there is no regulatory framework that governs them. This has also created loopholes on the checks and balances since the safety measures cannot be enforced.
According to the Acting Community development officer Bugiri District Shafic Butanda, the district has not taken interest in gold mining in the district.
‘’Gold mining is a new thing, so politicians in the district have not shown interest in it and we are forced to reach out to the central government to take up the issue of regulating small scale miners’’ he told Oil in Uganda.
The visit to Busoga revealed that artisanal mining, just like other areas around the country is a source of livelihood for many Ugandans. A recent study estimates that over 400,000 people in Uganda who are directly engaged in the activity and additional 1.5 million benefitting indirectly.
This is a part one series of the gold story in Uganda. In the subsequent part, we visit the Mubende mines whose operations are comparatively at a more sophisticated level.
Report by Collins Hinamundi and Robert Mwesigye
President Yoweri Museveni has defended the ‘oil cash bonanza’ in which 42 top civil servants and government officials were rewarded Shs. 6bn for their role in defending the oil tax cases in both Uganda and London.
The President said the oil cash bonanza; now commonly known as ‘presidential golden handshake’ was deliberate and did not break any law.
“I reject that I did anything wrong. I’m very proud of these young people,” he reportedly told National Resistance Movement Members of Parliament on Tuesday while addressing a caucus meeting at State House Entebbe.
In anticipation of a heated debate in parliament over the oil cash payouts, Museveni said that the Tullow-Heritage case was no ordinary case and castigated Members of Parliament for insulting ‘good people’.
“It was an international war, which the lawyers and the tax ladies [Ms. Allen Kagina and Ms. Akol Doris won amidst pressure, challenges and the temptations that they faced,” he said.
Other officials who benefited from the ‘presidential golden handshake include; former Permanent Secretary in Ministry of Energy, Fred Kabagambe Kaliisa, former URA’s head of legal affairs and ED KCCA, Jennifer Musisi, Secretary to the Treasury Keith Muhakanizi, former Attorney General Peter Nyombi and his deputy, Fred Ruhindi, Lawrence Kiiza from Ministry of Finance, Ernest Rubondo, the Executive Director of PAU, Francis Atoke, the Solicitor General, lawyers; Ali Ssekatawa (URA), Martin Mwambutsya (then State Attorney), Peter Muliisa among others.
Museveni told Mps that during court proceedings of the case, he was approached by many people who advised him to settle the issue outside court, because Uganda was likely to lose a lot of money. He explained that he was strengthened by the Ugandan team that they were going to win the case – and it was through that background that he decided to thank the team.
“If the support staff were part of the big war that saved Uganda trillions and gained $ 451m, if they get shs,50 million for their first time in life, it is okay. It was their luck and they were part of the war,” Museveni told Mps.
He defended his action arguing that in the last 30 years, he has given a monetary ‘handshake’ twice.
He explained that the first ‘golden handshake’ was in 2006 when he gave out $20,000 to a group of scientists in the Ministry of Energy and Mineral Development when they discovered oil and the second one being the Oil cash bonanza.
However, he said the only thing that could have gone wrong is that the list of beneficiaries could have been inflated behind his back.
“Perhaps there is a possibility that the list of beneficiaries was infiltrated and other names included. This has to be investigated,” he noted.
Report by Edward Ssekika.
Government will in February 2017 relocate 46 families who opted for resettlement to pave way for the proposed oil refinery in Kabaale parish, Buseruka sub-county, Hoima District, Francis Elungat, the Land Acquisition officer Ministry of Energy and Mineral Development has revealed.
In June 2012, government acquired a 29sq. Kilometre piece of land covering 13 villages Hoima District thus displacing 7,118 people.
The families are to be resettled on a 533-acre piece of land in Kyakabooga village in Buseruka sub-county; 3kms off Bisenyi trading centre located along Kaiso-Tonya road. Kyakabooga village is located 20 kms away from Kabaale parish.
Elungat said that government will first hand over the 46 completed houses to the affected families in February and also provide food supplies to the families for the next six months.
“Each family has been promised a cow, two goats, 10 kilograms of maize seedlings, a machete, hoe and other domestic tools,” he revealed, adding that these supplies are meant to sustain the families till when they will be self-reliant.
“The other 29 families that did not have houses on the land will also receive land titles of their lands in this same area,” he added.
According to Elungat, each family will be allocated a piece of land the same size as the one they previously owned in the refinery area.
“We are giving a minimum of one acre even for those who had less than an acre and each resettled family will have two land titles; one for the house and another for the farmland,” he noted.
Mixed feeling over house design
The completed houses seen by Oil in Uganda, will each have one sitting room, three bed-rooms, an inside bathroom and a kitchen. Outside facilities such as outside kitchen area, pit latrine and bathrooms have been provided for.
The houses will also be connected with hydroelectric power.
Government has also built a seven classroom block about 200 metres away from the resettlement village and Buseruka health centre; which is about 5 kilometres away, has been expanded and upgraded as part of the Resettlement Action Plan implementation to cater for the medical needs of the families.
Despite the houses being built in an urban-like setting, some of the families to be resettled have expressed concerns over the designs.
Ephraim Turyatunga, 47, says Government promised them a 3-bed room house which has a kitchen, toilet, a sitting room and a store.
However, looking at the houses built, Turyatunga says, the kitchen is very small and no store has been provided.
He argues that his family is comprised of 15 people who may not fit into the three bed room house.
“I stay with my father, mother and two of my married sons and their families. Will we all fit in that small house?” he questioned.
“Even the food package which government is providing for is not going to be enough to feed my family.”
Warom Gura, 50 and a resident of Nyahaira village says he is no longer interested in being relocated.
“I changed my mind. I want compensation but am not sure if Government will listen to me” He told Oil in Uganda.
Gura had a semi-permanent house built of mud and wattle with an iron roof on a 13 acre piece of land where he also cultivated and reared livestock.
“That small house they are giving us in Kyakabooga will not be enough for me since I have a family of 12 people,” he stated.
According to the Hoima district physical planner Robert Mwanguhya, the construction of resettlement houses delayed due to the numerous bureaucratic consultation processes between government, consultant and the project affected persons.
“Government had initially wanted to build a house in the respective land of each relocated family, but the plan was opposed by the affected families on grounds that they wanted to maintain social ties with neighbours” he said.
“We changed the plan to suit the proposals of the families. Now they are shifting goal posts but it is too late” Mwanguhya added.
According to Dennis Obbo, Ministry of Lands spokesperson, in 2015 a team of physical planners conducted a topographic survey that informed the physical planning that was participatory.
The families have waited for resettlement for over 4 years since government commenced the implementation of the Resettlement Action Plan (RAP).
Oil in Uganda has also learnt that Strategic Friends International and government officials have already briefed the refinery-affected persons about the impending relocation exercise.
Report by our Hoima Correspondent
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