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
Following the oil cash bonanza in which 42 top government officials were rewarded with colossal sums of ‘oil money’, activists want an audit of the entire oil sector.
This move follows a public uproar, over ‘the ‘scandal’ in which 42 top government officials, were paid Shs 6bn (about $1,656,000) as a reward for winning Tullow and Heritage cases over Capital Gains Tax.
Winfred Ngabiirwe, the Executive Director, Global Rights Alert, says the ‘oil cash bonanza’ speaks volumes of how oil money is and will be spent.
“This bonanza confirms our fears that oil revenues will not deliver the country from poverty,” she explains.
“The level of secrecy and the impunity of the key players in the sector only confirm that Uganda is creating her own model of oil curse. It appears, those in power have decided to eat what they can eat, uncertain when production will start and oil dollars start flowing,” she argues.
According to Ngabiirwe, all these are attributed to government’s delay or refusal to sign up to the Extractive Industries Transparency Initiative (EITI), a global frame that promotes transparency and accountability in the extractives sector.
The EITI framework, she argues, would enable Ugandans to know how much the country is earning from oil and gas resources and how the money is spent.
“We need a forensic audit of the entire sector. First, we need to know whether the country is collecting the right amounts of money from oil companies, and are oil companies paying right taxes to our coffers and then Ugandans must follow the money. Short of that, we are dreaming that will benefit our country,” she demands.
Gerald Karuhanga, the Ntungamo Municipality Member of Parliament, concurs with Ngabiirwe echoing that the cash bonanza is a confirmation of how oil money will be put to waste.
He argues that the fact that government can extravagantly spent colossal sums of money on “a golden presidential handshake’, for simply winning a case, what will happen when the ‘real’ petro dollars begin to flow.
Defending the oil cash bonanza, Sarah Birungi Banage, Uganda Revenue Authority’s Assistant Commissioner for Public and Corporate Affairs, notes that the ‘presidential golden handshake’, was in appreciation of the exemplary performance by the team and a standard international best practice.
“….. government granted the team involved an honorarium or bonus or golden handshake totaling Shs 6bn. This represented less than 1% of the amount brought in or defended,” reads in part a statement from URA.
“The team brought in a combined total of $700m into government coffers after a series of court battles in Uganda’s Tax Appeals Tribunal, High Court, Court of Appeal and High Court of London, Court of Appeal of UK, and two international tribunals. This was from the Heritage transaction and the subsequent Tullow transaction. The two cases were an unprecedented win for the country, and the first of its kind in Africa in the sector of Oil and Gas Taxation,” the statement further notes.
The officials who benefited from the ‘presidential golden handshake include; former Permanent Secretary in Ministry of Energy Fred Kabagambe Kaliisa, URA’s Commissioner General Doris Akol, 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. Others include lawyers; Ali Ssekatawa (URA), Martin Mwambutsya (then State Attorney), Peter Muliisa among others.
In November, 2015, President Yoweri Museveni wrote to the Minister of Finance, Hon. Matia Kasaija authorizing cash payments to the 42 government officials.
“I met with a team of officials that handled the case and they requested to be considered for a reward in appreciation for the work done. Given the amount of money that was recovered for the government, I agreed that government pays them some money as a token of appreciation. I therefore direct that a team of 42 government officials be paid Shs 6bn only,” Museveni wrote in his authorization letter.
The oil cash bonanza comes after, the ‘first oil money’ was allegedly illegally released from Bank of Uganda, purportedly on the orders of the President to buy fighter jets in 2013.
Report by Edward Ssekika
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