The three joint venture partners operating in the Albertine Graben have launched the Front End Engineering Design (FEED) studies for Nwoya and Buliisa oil fields in a bid to fast track oil production by 2020. Total E&P Uganda , Tullow oil and China National Offshore Oil Corporation (CNOOC) signed the pact yesterday (February 14, 2017) at Sheraton Hotel in Kampala and was witnessed by Minister for Energy Eng. Irene Muloni, Mike Cleaver Vice President of Chicago Bridge and Iron Company(CBI) , Ashley Rees Managing Director of Fluor and Maxine Mikoyan Vice President of Technip.
Technip, Fluor and Chicago Bridge and Iron Company (CB&I) are the three international contractors that were awarded the contract to undertake the first phase of FEED design completion for a period of six months. Upon successful completion, the two best companies will be invited to compete for Engineering, Procurement and Construction contract. The FEED studies which will cover Exploration Area 1 (EA1) in Nwoya and Exploration Area 2 (EA2) in Buliisa respectively are expected to outline technical aspects of the oil fields (design of trunk pipelines-crude feeder pipelines, Central Processing Facilities which is the most critical infrastructure since it is like ‘first refinery’ and other attendant infrastructure), costs estimates and schedules of implementation of the production phase. According to Energy Minister, Eng. Irene Muloni, who was present at the signing of the design engineering studies framework, Uganda’s target of having first oil remains 2020. “We gave the joint venture partners up to the end of this year (December 31, 2017) to make a Final Investment Decision (FID); a decision on whether to invest or not to invest in our country,” she said, adding that government expects the oil companies to abide by the agreed deadline as penned on the production licenses awarded last August. “Joint venture partners have sunk in over $ 3 billion for the last 10 years. So they are also looking forward to recouping their investment and everyone is asking government why it is taking us forever to get out oil out of the ground,” she noted. Therefore, Final Investment Decision (FID) by the end of 2017, and ‘first oil’ by 2020, must become a reality, Muloni emphasized.
Speaking on behalf of the joint venture partners, General Manager Total E&P Uganda, Adewale Fayemi explained that FEED studies will allow the joint venture partners to make a Final Investment Decision (FID) before the end of this year as per the contracts signed with government of Uganda. “This is a milestone in the country’s journey towards oil production by 2020. We are currently preparing a call for tender for enabling infrastructure design work which is expected to be awarded in May, 2017,” Adewale told Oil in Uganda. He further revealed that the FEED studies will however not include the kingfisher area operated by CNOOC-this is yet to be launched.
The enabling infrastructure are works required ahead of major engineering and construction work including local access, site preparation, fencing and similar tasks for which Ugandan companies are expected to be involved. Exploration Area 1 and 2 will require at least one CPF located in Buliisa district and will have capacity to produce 200,000bpd. The second CPF will be located in the Kingfisher area and will capacity to produce 30,000bpd. In total, the country expects to produce 230,000 barrels of oil per day, out of which the refinery will require 30,000 barrels while the 200,000 barrels will be exported through the East African Crude Oil Pipeline. Last month, the governments of Tanzania and Uganda launched the Front End Engineering Design (FEED) study for the East African Crude Oil Pipeline Project ( EACOP) which is expected to be completed after eight months.
Report by Edward Ssekika.
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.
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
High court Masindi has indefinitely postponed the hearing of the Rwamutonga case where more than 200 families were brutally evicted to pave way for the construction of oil waste treatment plant, Oil in Uganda has learnt.
Justice Albert Rugadya Atwoki, High Court resident judge Masindi was expected to give a ruling on an application on January 19, 2017but informed the court that he would make a ruling on notice.
According to Bashir Twesigye, Executive Director Civic Response on Environment and Development, the judge’s move to make his ruling on notice shows that the judge is not comfortable with the case hence the hesitation to make a decisive ruling.
“Hon. Justice Rugadya should not have any excuse ruling on the case because he has had six months to study the case,” he argued.
“The judge making a ruling on notice means that he will make a decision when he feels ready,” he explained to Oil in Uganda, adding that since the first ruling was done last year, this second ruling would give the evictees a mileage and has been pending for a year.
The families were evicted in August 2014 from the two pieces of land; one titled in the names of Robert Bansigaraho and another in Joshua Tibagwa. The affected families have since been living in Kakoopo Internally Displaced Persons camp (IDP) with no stable source of livelihood.
Nelson Atich, Bugambe District Councilor and representative of the evictees told Oil in Uganda, that they are shocked by the judge’s decision to make the ruling on notice.
“We are now thinking of petitioning the Principal Judge over this matter,” he stated.
“When we went to court on 19th, January, 2017, we were surprised when the clerk to the judge told us that the judge will give us the ruling on notice. We are in a dilemma, but we think we are not getting justice from courts of law,” Atich said.
He further added that the evicted families have been living in a camp for close to three years now under inhuman conditions yet the case has not been given priority,” Atich said.
Oil in Uganda has learnt that the court ruling was actually meant to be given on December 8, 2016 but was postponed to January 19, 2017.
Last year, Justice Simon Byabakama, the then resident judge Masindi ,ruled that 53 families out of the 200 families affected were illegally evicted on land owned by Robert Bansigaraho since the eviction court order was issued in error.
Justice Byabakama in his ruling also ordered Bansingaraho to compensate the evictees for the unlawful eviction.
“The eviction was unlawful and should not have happened in the first place because at the time of the execution of the warrant of vacant possession, there was an ongoing suit to determine true ownership of the land,” ruled Justice Simon Byabakama last year.
The court went ahead to award costs of the application to the residents, but declined to restore them on the land until the main suit was determined.
In their case application, the evictees, through their lawyers Iam Musinguzi of Musinguzi and Co. Advocates and Jonathan Okiria, an advocate with Justice Centers Uganda in Hoima are seeking a declaration that the families were unlawfully evicted by Tibagwa Joshua and should be awarded compensation.
In November 2016, Betty Amongi, Minister of lands visited Rwamutonga camp and appointed a probe committee to investigate and establish the rightful owners of the disputed land.
According to Isaac Kawooya, Hoima Resident District Commissioner, the committee finalized its investigations and has submitted a report to the minister.
Report by Edward Ssekika
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
Parliament of Uganda has set up a select committee to investigate the Shs 6bn oil cash payouts to 42 senior government officials. This is the second time the legislative branch of government has probed the executive on oil revenues.
Speaker of Parliament, Hon. Rebecca Kadaga on Thursday last week directed the Commissions, Statutory Authorities and State Enterprises (COSASE) Committee, chaired by Bugweri MP, Hon. Abdul Katuntu to handle the investigation and report to the House in two months.
The motion to set up a select committee was moved by Mbarara Municipality MP, Michael Tusiime last week in a stormy plenary session that extended into the night.
Hon. Tusiime stated that Government had hired a foreign law firm; Curtis Mallet-Provost, Colt and Mosle LLP to represent the country in the law suits and was already costly to the country.
“The American law firm was hired to represent in the $ 404 million capital gains tax dispute adjudicated in London at a cost of $ 10 million dollars,” he argued, adding that it is prudent for investigate the oil cash payouts and especially the procedures that were followed to reward the officials.
According to Hon. Alex Ruhunda, Fort Portal Municipality MP, the move to setup a committee is not to witch-hunt the beneficiaries but a move to create transparency on the issue.
Winfred Niwagaba, Ndorwa East MP concurred with Hon. Ruhunda arguing that it is time for government to demonstrate its tenacity to fight corruption.
“We will be glad to see the perpetuators not only appear before the Anti- Corruption Court, but refund the Shs 6bn back to the Petroleum Fund,” he said.
However, William Byaruhanga defended the payouts, arguing that the case was the first of time in the history of the country, both in terms of complexity and the magnitude of the money involved. Kadaga said, when the team won the case, she wrote a letter thanking them for fighting for the interests of the country.
This is the second time in less than five years that parliament is instituting a probe committee to investigate issues of corruption and alleged misuse of oil revenues.
In 2011, Parliament set up an Adhoc Committee, chaired by Michael Werikhe, the then chairperson of Natural Resources Committee, to investigate alleged corruption in the sector.
A dossier had been tabled before the House by MP Gerald Karuhanga that implicated Prime Minister Amama Mbabazi, Ministers Sam Kutesa and former Energy Minister, Hilary Onek in corruption. The committee report exonerated the politicians of corruption. The country waits the speaker to name the select committee.
BUNYORO LEADERS UNHAPPY
Buliisa county Member of Parliament, Hon. Stephen Mukitale Biraahwa revealed that his constituency, despite housing over 26 oil wells has not benefited from the Capital Gains Tax recovered by government.
“The money would have been ploughed back in the oil sector to prepare for Uganda’s journey towards commercial oil production,” Hon. Biraahwa who sits on the parliamentary committee on National Economy told Oil in Uganda.
He added that the revenues earned so far should be in improving roads in the oil region, training the population, conducting systematic survey and demarcation of land, building capacities of local suppliers and environmental compliance among others.
“What is surprising communities hosting oil and gas activities is that the money is being shared in Kampala by government officials without considering the interests of the industry and the communities” he said.
Bugahya County Member of Parliament, Hon.Pius Wakabi demanded that the beneficiaries who received the oil cash should refund it immediately.
Hon. Wakabi whose constituency has over six oil wells, stated that it is shocking that the money was shared at a time when teachers demand salary increment and lecturers striking over remuneration.
Litmus test for Uganda?
The management of revenues from oil is a litmus test for Uganda. Many activists have questioned whether the petroleum resource will be a blessing or a curse to the country citing scenarios in oil-producing countries in Africa such as Democratic Republic of Congo (DRC), Angola, Sudan, Chad, and Nigeria among others.
Report by Edward Ssekika and our Hoima Correspondent.
The Democratic Republic of Congo (DRC) has formally expressed interest to join the East African Crude Oil Pipeline Project (EACOP), Oil in Uganda has established.
Uganda and Tanzania plans to construct a 1,445 km long, 24-inch diameter, heated pipeline to provide access for Uganda’s crude oil to the international market.
Uganda’s Minister of Energy and Mineral Development, Irene Muloni noted that Democratic Republic of Congo government is considering EACOP as an alternative route to access the international market for its crude from newly discovered oil resources in the eastern part of the country.
“The DRC government has formally expressed interest to join crude pipeline project. They see it [EACOP] as an alternative route for their crude to the market,” she said, while launching the Front End Engineering Designing (FEED) for the crude oil pipeline project recently.
An American Company Gulf Interstate is conducting the FEED study that is expected to provide the actual designs, costs and route for the crude oil pipeline. The study that was launched early January 2017 is expected to be completed within 8 months.
Muloni explained that when they (Uganda and Tanzania team) was inspecting the Tanga port last year, they were joined by an official delegation from the Democratic Republic of Congo’s Ministry of Hydrocarbons, and the delegation expressed interest to participate in the crude oil pipeline project.
“This is potential route for them to access the international market,” she explained. This means DRC government, if admitted will be expected to acquire a stake in the EACOP and pay a tariff of $ 12 dollars per every barrel of crude oil transported through the pipeline.
The Democratic Republic of Congo (DRC) has so far discovered 3 billion barrels of oil around Lake Albert Eastern and part of the country, which neighbors Uganda. However, it is yet to be confirmed how much of the 3 billion barrels is recoverable. It is therefore cheaper for DRC to transport its crude through EACOP and the Alternative being construction of a 6,500 kilometer long pipeline running though the vast jungles to the country’s western coast line.
Last year, Giuseppe Cicarelli, the Chief executive officer of Oil of DRCongo, one of the companies exploring for oil in Eastern DRC, said access to the least cost option to get crude to the international market is vital to the next round of investment the company is supposed to make.
“Oil of DRCongo is actively working to find viable solutions for the future evacuation of the crude oil from block I and II of Lake Albert, having already completed an extensive seismic campaign,” he said. Oil of DRCongo, operates two blocks around Lake Albert.
DRC’s expression of interest follows, President Museveni recent appeal to his Congolese counterpart, Joseph Kabila to consider joining the northern corridor projects, in particular the East African crude oil pipeline.
French oil giant, Total S.A is one of the companies exploring oil in northeastern DRC. Total holds 66 percent stake in Block 3, located along Lake Albert alongside with South Africa’s SacOil.
Total ‘has 54.9 majority stake in Uganda’s’ following a partial farm- down with Tullow, though the transaction awaits government approval. With oil exploration activities in DRC, a controlling stake in Uganda’s oil fields and interests in Tanzania’s oil exploration activities, it makes economic sense for the company to push DRC government to join EACOP.
Total has already indicated its willingness to finance to the crude oil pipeline is likely to be the biggest financier of the crude oil pipeline.
Report by Edward Ssekika
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.
Gold miners in Mubende district have commended the safety campaign championed by Action Aid international to promote health and safety standards in the mines.
During a recent visit by Oil in Uganda to the gold mines early this year, several miners in Kitumbi sub county, Mubende District expressed their gratitude to Action Aid International for providing them with safety gears and providing a platform for awareness.
Nakimuli Shamim, one of the beneficiaries explained that she was unaware of the importance of using safety gear while washing the gold dust.
“Now that I understand how important this safety gear is, I can now wash up to 8 basins of gold dust without worrying about getting sick from exposure to mercury,” she narrated to Oil in Uganda.
“Before, I used to develop itchy skin rashes but my hands are now covered with gloves and I also have gum boots to protect my legs,” she noted.
Nakimuli adds that using the safety gear will eventually see her walk home with a high income since she will be able to work for longer hours.
As for Nalukuuma Juliet who has been in the gold industry for three years, the use of safety gear had never crossed her mind.
She narrates that she would endure the tedious process of washing the gold dust despite the fact that her hands always developed small painful swellings.
“If you are looking for money, you have to endure and keep working even if you have those small swellings. If you do not work you cannot be paid,” she stated.
Nalukuuma further adds that often, it is uncomfortable working under the sun while wearing the safety gear but one has to persevere.
According to Zziwa Hussein, a grinding machine operator, he is now protected from the dust emitted during the crashing process that has made him suffer from constant chest pains.
I now hope that the chest pains from inhaling too much dust will reduce with this safety gear,” he says.
In August 2016, over 80 miners in Lubaali, Lujjinji B and Kampala mining sites in Mubende district received safety gears including gumboots, waterproof overalls, nose masks and helmets from Action Aid International in a bid to promote health and safety conditions in mines.
Report by Josephine Nabaale
Don Binyina is the Executive Director Africa Centre for Mineral Policy and the new Chair of the Audit Committee of the International Conference of the Great Lakes Region Protocol (ICGLR) against the Illegal Exploitation of Natural Resources. Read More