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    Leaders in Oil Rich Districts Want a Special Fund to Monitor Oil and Gas Activities

    Waiga village is one of the areas that is being claimed by the pastoralists

    Globally, oil and gas activities are known for its degrading and destructive effect on the environment. In Uganda, there are already fears that oil and gas activities in the Albertine graben could destroy the fragile ecosystem. This calls for increased close monitoring and early mitigation measures to be put in place.

    District leaders from the oil rich Albertine graben want government to establish a special fund dedicated to helping district environment officers to routinely monitor the impact of oil and gas activities on the environment and undertake early mitigation measures.

    Bulisa district chairman Mr Agaba Simon Kinene  said, “As a district, we are implementing oil and gas industry at zero budget, yet we are decentralized,” he said.

    The oil production phase, is expected to generate a lot of hazardous or non- hazardous waste. Therefore, district environment officers are expected to take a center in ensuring that all the oil waste generated and pollution are properly managed.

    As Uganda prepares to started oil production, a lot o  is preparing for  District Environment Officers (DEOs), have often complained of lack of facilitation to monitor oil and gas activities.

    Mr Philip Ngongaha, the District Environment Officer, Bulisa was bolder and called for the establishment of a fund to help them monitor oil and gas activities. He said currently, district environment officers lack facilitation to do their work. “We need a special fund to facilitate oil and gas monitoring,” Ngongaha argues.

    He argued that the fund would help the environment officers acquire modern equipment for monitoring. “You cannot expect an environment officer to monitor noise pollution using naked eyes. We require modern equipment,” he said.

    The leaders were speaking at an oil and gas conference organized by Advocates Coalition for Development and Environment (ACODE) at Imperial Royale Hotel in Kampala last month.

    He argues that given the environmental concerns that are expected to come with the petroleum sector, it is important to allocate enough resources to monitor any changes in the environment and make early mitigation measures. “Local environment committees provided for under in the law but are not in existence,” he said.

    “I wish to concur, we need a special fund for environmental officers, to monitor these activities otherwise, we shall keep taking when the environment is being depleted” Paul Mulindwa, the Program Coordinator, Kibaale District Civil Society Organizations Network said.

    Presenting a paper on the impact of oil and gas on local government, Nwoya District Chairman Mr Patrick Okello Oryema wondered how district environment officers monitor oil and gas activities without being facilitated to do their work.

    However Ms Aijuka Sarah, the Environmental Monitoring Officer in charge of Oil and Gas at the National Environment Management Authority (NEMA) explained that the authority is already drafting the National Oil Spill Management Regulations and contingent plan.

    “We already have oil waste, but we are still lacking regulations on how to handle the oil waste,” Ms Aijuka explained. Aijuka said the environmental watchdog operates on an assumption the district environment officers have money for environmental activities, an assumption that she said won’t be held anymore but rather consider the lack of finances and see how best to have the people facilitated.

    Edward Ssekika

    Oil.Uganda@actionaid.org

  • Dr Isabalijja Steven, the Permanent Secretary Ministry of Energy who was until his recent sucking.

    Why Museveni fired Dr Isabalija as Ministry of Energy Permanent Secretary?

    The muddled procurement of the lead developer for the oil refinery could have played a role

    Dr Isabalijja Steven, teh Permanent Secretary Ministry of Energy who was until his recent sucking.

    President Yoweri Museveni on Wednesday, in a surprise twist of events, fired the Permanent Secretary, Ministry of Energy and Mineral Development, Dr Stephen Isabalija. Though the President did not give reasons for the surprise sucking, analysts within the Ministry of Energy and Mineral Development argue that the messy handling of the procurement process for the oil refinery lead developer could have played a hand in Isabalija’s sacking.

    Mr Isabalija was only 10 months old into the job, after replacing the long serving Fred Kabagambe Kaliisa during a reshuffle of Permanent Secretaries in November last year. Kabagambe Kaliisa is now a Senior Presidential Advisor on Oil and Gas.

    The President appointed Robert Kasande, the acting director, Petroleum Directorate in the Ministry of Energy and Mineral Development, as the acting Permanent Secretary. Mr Kasende, a geologist by profession, was also the project manager for the oil refinery project.

    Isabalija’s sacking that started as a rumor on Wednesday, was later on Thursday confirmed by the Executive Director, Uganda Media Center and government spokesman Ofwono Opondo who twitted, “Dr Stephen Isabalija’s contract has been terminated and he is to be paid one month in lieu of notice,” Opondo said.

    He said the President did not give any reason for the terminating Isabalija’s contract. During his short stint at the Ministry, Isabalija’s oversaw the eviction of over 60,000 artisanal gold miners in Kitumbi Sub county, Mubende district. Government claims that the artisanal gold miners were illegally mining gold and want an “investor” to take over.

    MESSY OIL REFINERY PROCUREMENT

    Dr Isabalija an academic and former Vice Chancellor, Victoria University, could have burnt his fingers in the procurement process of the lead developer for the oil refinery.

    Early this month, Dr Isabalija announced Albertine Graben Refinery Consortium (AGRC), a consortium of American and Italian companies, as the winner for the oil refinery deal. This edged out a Chinese Consortium led by Guangzhou Dong Song Energy Group Limited, that accused the selection panel of corruption.

    Guangzhou Dong Song Energy Group Limited, was granted a mining lease to develop the Tororo Phosphates.

    The Chinese consortium includes; Guangzhou Dong Song Energy Group Limited, Guangdong Silk Road Fund, China Africa Fund for International Corporation, China Petroleum Engineering and Construction Corporation (CPNC) and the East Design Institute.

    After being edged out in the $ 4bn dollars refinery deal, the Chinese penned a letter dated 8, August, 2017, to the Minister of Energy and Mineral Development, Irene Muloni copied to the Prime Minister in which the consortium expressed shock at the announcement.

    “We are taken aback by press reports indicating that the government of Uganda has reportedly selected a group known as Albertine Graben Refinery Consortium to develop the refinery project. Incidentally, the same press reports indicate that the Dong Song – CPECC consortium had been appraised as the best bidder with 83.38 percent,” reads the letter signed by LV Weidong, on behalf of Dong Song led consortium.

    It added, “The purpose of this letter is to inform you that the Dong Song – CPECC consortium has never disintegrated. It remains strong and committed to invest in the development of Uganda Refinery project provided the concerns raised in the consortium’s earlier letters are addressed. The letter reads.

    The consortium even threatened to challenge the procurement process that led to the selection of any other consortium in courts of law. They also complained that the only reason, they were denied a deal is because, the consortium members are close to President Yoweri Museveni.

    “Dong Song is suffering because it is close to the President. There is no way it can give money to people involved in the selection process,” an official is reported to have said. This year, two officials from the Ministry of Finance tried to solicit for money from Guangzhou Dong Song Energy Group Limited, the president laid them a trap and they were arrested.

    The Chinese also alleged corruption in the way the deal was awarded. “So, we were edged out, because they know we can’t give them money,” an official of the consortium is reported in the local press to have complained.

    One of the Consortium members, CPECC, a subsidiary of CNPC has demonstrated capacity having built refineries in South Sudan, Algeria, Chad and Niger. However, selection committee is reported to have edged out Dong Song consortium because they didn’t provide their intended financiers.

    The Chinese are also known of using powerfully connected individuals some of them members of the first family to broker their deals. Guangzhou Dong Song Energy Group Limited, used the President to get the Tororo Phosphates Deal. It is this politics of balancing interests, that could have landed Isabalija in trouble and could have had played a role in sacking.

  • Residents of Bukuya gold mines that were arrested during the evictions receive legal assistance from a team of lawyers from Chapter Four and ActionAid Uganda.

    Mubende miners count losses after ruthless eviction

    Residents of Bukuya gold mines that were arrested during the evictions receive legal assistance from a team of lawyers from Chapter Four and ActionAid Uganda.

    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.

    Mr Kawunde, a gold miner who lost mining equipment worth millions of money

    “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

    Oil.Uganda@actionaid.org

  • Keith Muhakanizi, Permanent Secretary Ministry of Finance

    Shs 2 trillion Oil Revenues Already Spent

    Keith Muhakanizi, Permanent Secretary Ministry of Finance

    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.

    PRESIDENTIAL HANDSHAKE

    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.

    UNCOLLECTED FUNDS

    “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

    Oil.Uganda@actionaid.org

     

  • Nivatiti Nandujja, Human Rights Coordinator (AAU). Photo by Francis Emorut

    Address challenges faced by women in mining – MPs, activists ask government

    Ms Nivatiti Nandujja, Human Rights Coordinator (AAU) speaking at National Dialogue. Photo by Francis Emorut.

    Members of Parliament and human rights activists have asked government to enforce the laws in the mining sector to protect the right of women in the sector. The MPs and other stakeholders said women in the minerals sector face a lot of challenges, which need to be addressed.

    The call was made during the National Dialogue on Land and Extractives, under the theme, “Harnessing citizen participation for good governance and sustainable livelihoods,” at Hotel Africana on Wednesday, April 26, 2017. The conference was attended by government officials, artisanal miners, district leaders, cultural leaders and civil society representatives among others.

    Nivatiti Nandujja, Human Rights Coordinator at Action Aid Uganda (AAU), said the extractives sector is male dominated and women participation is wanting. She explained that the few women employed in mines are working under inhuman and poor working conditions with meager pay.

    “Women working in mines do not enjoy the entitlement provided for by the law. They don’t get maternity leave or sick leave, but instead, when they get pregnant, they are simply laid off,” Nandujja said. She said despite the good policies and laws on gender based violence, the position of women has not improved and advocated for other interventions in addition to enforcement of policies and laws in order to ensure gender equity in extractives sector.

    Catherine Nyakecho, a Geologist working with Ministry of Energy and Mineral Development disagreed with MsNandujja that the minerals sector is male dominated. She quoted a research by African Center for Energy and Mineral Policy (ACEMP) that revealed that of the sites visited, women are more into stone quarrying, salt mining, marble, limestone, and sand mining – the low value minerals, while the men are where the money is.

    Catherine Nyakecho,  Geologist, Ministry of Energy and Mineral Development speaking at National Dialogue. Photo by Francis Emorut.

    However, she said women in mines have been exposed to more poor working conditions than men. For instance in stone quarrying, she said women and children are engaged in crashing stones with their bare hands, which exposes them to accidents and a lot of dust, which affect their lives.

    Despite spending a whole day crashing stones, women get meager pay. “Stone quarries lack toilets and therefore women during menstruation periods have to travel back home for health break – wasting a lot of their valuable time and when they fall sick, they get no payment,” she said.

    Nyakacho explained that in salt mining, men wear condoms to prevent salty water from entering their bodies through their private parts, but in contrast, though women need protective gears too, they are normally not provided for, and thus enter salty water without protective gears, which has negative consequences on their health.

    In gold mining, women are exposed to dangerous chemicals like mercury. Whereas the men get the ore or gold sand out of the ground, Nyakecho said women are exposed to mercury during panning for gold which affect their lives. Weighing in on mercury, one of the participants from Amudat district said there is a worrying trend that feet/legs of women working in goldmines are swelling, due to what she suspects could be prolonged exposure to mercury.

    Deborah Ariong, the Natural Resources Officer, Amudat district, said she had witnessed breast-feeding mothers panning gold with mercury and then breast-feed babies thereafter. She called for strict enforcement of health and safety measures in mines like ensuring all workers wear protective gears.

    Betty Atiang, programme Manager at Saferworld Uganda, told the extractives sector in Uganda is expanding, and as it expands, it is worsening existing tension and exposing new conflicts. The sector, she explained, is faced with land conflicts in form of land grabbing, contention over surface rights, conflicts that relate to allocation of royalties, environmental degradation and gender based violence among others. She observed that conflict is an impediment to good governance and implored participants to make a contribution towards promoting conflict free extractives sector, transparency, accountability, citizen’s participation in decision making.

    Plenary discussion at National Dialogue. Photo by Francis Emorut.

    Drawing from his experience as an artisanal miner in Mubende district, Emmanuel Kibirig said women of today can do mining, though by their nature they can’t go inside the pit. Therefore, in the pit, miners don’t employ women. He explained that in gold mining, the value chain is that men dig and go inside the pit in order to extract gold ores/sand on the ground for women to their work in the value chain.

    Mukitale Mukitale, the MP Buliisa, said women artisanal miners need to form strong cooperatives or associations, through which they can demand for more protection and seek help. Weighing on the discussion, Adong Lilly, Woman MP Nwoya district, told in order to protect women rights, there is need to amend the laws and policies governing the minerals sector to cap a percentage of jobs and contracts to be given exclusively to women. This will ensure that women in the sector are empowered.

    By Edward Ssekika

    Oil.uganda@actionaid.org

  • L-R: Hon. Peter Lokeris, Hon. Michael Mawanda and the Anti Corruption Coalition's Abbas Kigozi

    National Dialogue to impact on governance of the Extractives Sector

    CSOs have organised a dialogue slated for Wednesday the 26th April 2017

    Archive photo from former event. 

    Four of Uganda’s Civil Society Organizations (CSOs) are hosting an annual multi-stakeholder national dialogue under the theme; Land and Extractives – harnessing citizen participation for good governance and sustainable livelihoods.

    The meeting that is expected to attract more than 100 participants is aimed at ensuring that stakeholders at the grassroots interact with the leaders at both local and central government to ensure transparency and good governance of the oil, gas and mineral sector.

    The convention, organized by Action Aid Uganda (AAU), Civic Response on Environment and Development (CRED), Saferworld Uganda and Transparency International Uganda (TIU), will be held at Hotel Africana on Wednesday the 26th of April, and among the invitees are delegates from Parliament, the private sector, industry players, government agencies, local government leaders, community leaders, community representatives and relevant CSOs.

    The meeting arose out of findings by civil society regarding the increasing unplanned and untimely displacements and land disputes in the oil rich and mining areas, which inhumane activities affect people, particularly the less privileged, including women and children.

    Instead of remedying this pattern, the government has instead recently decided to worsen the problem by proposing an amendment to Article 26 of the Constitution with the effect of allowing government to acquire land before effecting compensation to the project-affected person.

    Elaborating on the expected outcomes from the meeting, Mr. Ivan Mpagi, the Extractives Governance Project Manager at ActionAid Uganda, explains that the meeting is meant to create a platform for discussing the challenges in the extractive sector by engaging policy makers on what needs to be done in order to address these challenges.

    “We want to bring the oil companies together to tell Ugandans how far they are in the actual extraction of oil,” Mr. Mpagi says. “The extraction will generate employment, and it will generate revenues as well, and we as civil society want to monitor this development and hold these actors accountable.”

    He further expresses hope of more transparency concerning the government’s exploration agreements with the oil companies (Tullow, CNOCC and Total), as he finds the government to have been “very secretive” until now. “Through the dialogue we hope that Ugandans can be told about the agreements made with these companies.”

    By Preben A. Martensen-Larsen   

    Oil.uganda@actionaid.org

  • Proscovia Nabbanja 2

    Government Officials Divided Over Tullow’s Farm-Down

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

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

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

    Government Warns Tibet Hima Company Over Safety Concerns

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Report by Edward Ssekika.

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

    Tullow Oil announces farm-down to Total

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

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

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

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

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

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

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

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

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

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

    Report by Edward Ssekika

  • A miner in Mubende 'washing' crushed, fine iron ore with mercury. Photo by Beatrice Ongede

    Government move to ban use of mercury in gold mining

    Stephen Wafula is a happy gold miner in Nakudi village, Banda Sub County, Namayingo district. The 27-year-old, father of 2 children, says, he switched from agriculture to gold mining last year, after witnessing his colleagues ‘prosper’ from mining. “Unlike farming, there is some money in gold mining. I don’t wait for a season, I earn per day,” he narrates, though hesitant to reveal how much he has earned from gold mining.

    Byakatunda Katib who also mines in the same area, says they can earn as much as 20 Million shillings ($5,500) a week from Gold mining, if the season is good.

    Like other artisanal miners, the use of rudimentary tools like hoes and spades are used in this area to dig deep underground and extract ore with traces of gold. After extracting the ore (soil containing gold) from the ground, the miners normally have two options; to dry, crush, wash and extract the gold or sell the iron ore to other people who can wash it and extract gold for themselves. Either way, the ore is sun dried and then put into a grinder and grounded into fine soil that is then mixed with water and mercury to attract gold dust (particles).

    “Without mercury, it is difficult to extract gold particles because we do not have proper mechanization,” Wafula explains. He adds that after extracting gold, the remaining ‘soil’ containing mercury is disposed of in the open ground or sold for further processing using cyanide.

    A-woman-crushing-the-iron-ore-from-one-of-the-fold-mining-sites-in-namayingo-districts-photo-by-Josephine-Nabale

    The use of mercury and cyanide is common in all gold mining area like Busia, Mubende, Moroto and Buhweju among others. These hazardous chemicals are mainly used to attract gold particles from the iron ore.

    Mercury is a thick, waxy silver chemical that is used in the extraction of secondary gold. This chemical is used to purify gold from ore in a process called amalgamation. During this process, the vapour from the amalgamation (burning of gold particles mixed with mercury) is inhaled by the miner who often does not have protective clothing.

    Many miners like Wafula are not aware of the risks of using mercury. Furthermore, they do not have proper healthy and safety gears for protection.

    In the latest value for money audit report into the mineral’s sector, the Auditor General, recommends that government should slap a total ban on the use of mercury in gold mining due to health and environmental consequences. The report covers the period between 2011 to 2015.

    “The use of mercury and cyanide in gold recovery is a health hazard and should be discouraged else safety precautions should be taken. There is bound to be serious environmental impacts and health issues related to pollution of streams and rivers of Mubende. According to the report, the tailings containing mercury is disposed of in the open, and when it rains mercury finds itself in water streams where the local people fetch water for domestic purposes.

    It takes more than 5 years for mercury to completely dissolve into the soil, while it takes 10 years for Cyanide to dissolve into the soil. The Auditor General findings are similar to the Directorate of Geological Survey and Mines (DGSM) internal inspection report that also noted illegal mining and ‘harmful mining practices’.

    According to the DGSM internal inspection report for June and July this year, the inspection team visited several artisanal mining sites where people were using mercury to recover the gold and the remaining tailings are then washed with cyanide in a makeshift processing plant which is a threat to the environment.

    In Namayingo district, the inspection report notes that there is a company known as Lujiji Processing Company that has installed a gold procession plant and uses Cyanide to extract gold from tailings left behind by the artisanal miners who are also using mercury to recover the gold.

    “The gold processing operations of Lujiji Processing Company should be halted until an Environmental Impact Assessment (EIA) process is finalized and approved by NEMA,” the report recommends.

    According to Oguttu Bonventeur Stephen, LC3 Chairperson Banda sub-county, the mercury being used in the mining sites are imported from Kenya through Busia and even as far as from Tanzania. He blames the porous borders and lack of enforcement on the use of the harzadous chemical.

    “This mercury is being used a lot here. In a day, I am told they can use about 15-20 kgs of mercury and all that ends up in our water streams,” he told Oil in Uganda during a meeting.

    Oil in Uganda has also established that artisanal miners in the mines buys 1 gram of mercury at 600 Uganda shilling at whole sale price and 1000 shillings at retail price.

    Emmanuel Kibirige, general secretary, Singo Artisanal Gold Miners Association and a gold miner at Kitumbi, Mubende district, argues that the problem is improper disposal of tailings. He concurs with Auditor General Report, that when it rains, mercury is washed away and end up in streams and water sources.

    “The problem is not mercury itself, but its improper disposal. It is disposed of anyhow. I think, we need to find a place, where we can dispose the mud containing mercury, and then treat,” he explains. However, he explains that many miners continue to use mercury without wearing any protective gear. “People here don’t use gloves, they use their bare hands and feet, yet there is mercury,” he said.

    During an impromptu visit to some of the mining sites in Bugiri and Namayingo districts respectively, Oil in Uganda also found out that there was limited knowledge on the dangers of mercury and cyanide use.

    At Byewunyisa Gold Mining Company in Budhaya Sub-county, the miners had removed their gumboots and were handling the tailings with bare hands, despite the fact that they had just used cyanide to get the gold particles.

    The story is not any different from situation at Nsango B mining site where children are engaged in washing crushed iron ore with mercury. Recently, Dr. Tom Okurut, the executive director, National Environment Management Authority (Nema) revealed the use of mercury by miners exposes them to contract diseases like lung and kidney problems.

    MINING POLICE The inspection report observes that miners have been sensitized against the use of mercury and environmentally friendly mining, there is very little change and recommends stringent enforcement mechanism. “Government should increase security in all gold rush areas including the establishment of Mining Police to enforce compliance,” the internal report recommends.

    Of recently, the government has established units in police to hand specific tasks. For instance, there is the oil and gas protection unit and environment protection unit among others, and therefore the ministry wants a specific unit for mining to enforce compliance with good mining practices.

    Report by Edward Ssekika and Collins Hinamundi. Additional information by Beatrice Ongode.