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Compensation remains thorny issue in oil regions

A cloudy day in Buseruka, Hoima District. (Photo: Thomas White)

A cloudy day in Buseruka, Hoima District. (Photo: Thomas White)

“We are frustrated since we have not received fair pay in compensation for our properties,” complains Albert Wathum, a resident of Panyimur fishing village on the shores of Lake Albert in Nebbi District.

He claims that since Total E&P began exploring in the area, many gardens and homesteads have been destroyed in the process of surveying, building access roads and constructing oil well pads. Residents expected compensation but, according to some, what they received was peanuts.

“Usually, a grown mango tree can fetch up to 120,000 shillings (USD 46) but we are being given 80,000. A cassava garden for instance acts like a source of food and income but is being compensated at only 120,000,” according to Mr. Wathum, who sounds more frustrated than other locals in the village.

Equally bitter complaints are voiced by residents of Kabaale Parish, in Hoima District’s Buseruka Sub-county, which sits on the 29 km2 of land where the government plans to construct a state-of-the-art oil refinery.  Locals complain that progress towards compensating them for land they will have to give up has been painfully slow and has meanwhile left them without any source of subsistence.

“We were told not to carry out any activities on this land. We are not supposed to even grow crops that can sustain us,” says Gideon Onyut, who recently returned to his home in Kyapaloni village, Kabaale Parish, after dropping out of Senior-2 studies at King’s High School in Hoima.

“I had to drop out of school because our only source of survival in this area is farming and since government halted all activities in the gazetted area, agriculture inclusive, my family does not have money to feed us and pay my school fees,” Mr. Onyut explains.

“Mr. Bashir Hangi [a communications officer with the government’s Petroleum Exploration and Production Department] comes here and lies to us day in day out. He does not tell us the truth. Our own local leaders are also not helpful.  They want something to be given to them in order for them to accord us the necessary help,” claims the embittered 20-year-old.

Mr. Hangi counters that he has made several visits to the site in a bid to update locals on progress towards obtaining the land. He says a Resettlement Action Plan was developed last year and handed over to the Government Valuer who has since approved it.

“This process was accomplished in December and we are yet to start compensating the residents. However, this does not mean that on receiving payment they immediately leave the land. We will give them ample time to resettle and they are free to continue cultivating until we complete the compensation process of all the residents,” he emphasises.

According to the Uganda Chamber of Mines and Petroleum, the government announced as long as five years ago that it would gazette 29 km2 of land for the refinery, which is expected to cost around US$ 2 billion. The Petroleum (Transport, Storage, Refining) Bill passed last month by Uganda’s parliament opens the way for the construction process.

According to media reports, the government has now hired an American company, Taylor-DeJongh, to help find investors willing to finance the project.

Yet, Bashir Hangi says, it is still too soon to give a start date for the construction work.

“Currently, we are working on obtaining the land, a process that can only be complete if we compensate all the residents there. The compensation process is most likely to start at the end of this financial year and will go on for over eight months,” he explained in a phone interview.

Who decides the rates?

The question of how compensation rates are set remains clouded in confusion. Local government leaders and central government officials give conflicting versions of how the system works in practice.

According to Dennis Obbo, a communications officer with the Ministry of Lands, Housing and Development, it is the duty of the District Land Board to develop a compensation matrix for each district.  The board sends land valuers to the field to estimate the rates of different property.

Local leaders, however, insist that the ‘mathematics’ of the compensation rate are handled by the Chief Government Valuer in Kampala.

Robert Okumu, LC-5 Chairman of Nebbi District, says that most locals are naive and do not understand the compensation process.  In an interview with Oil in Uganda,  he revealed that although a compensation assessment was carried out in Nebbi, the rates were low.  For this reason, he adds, Buliisa’s rates were adopted to assess compensation.

“The problem we are facing is that these matrices are not usually brought to us for approval. They only involve us when misunderstandings arise,” he says.

LC-3 Chair for Pakwach, Benson Okumu, complains that the compensation rates used in Panyimur were unfair. Land values differ between districts, he argues, so each region needs its own compensation rates. “You cannot compare land in Nebbi to Hoima, those are two different places.”

However, the Chief Government Valuer, Benon Okumu, insists that government is doing all it can to ensure fairness in compensation for all those affected by oil exploration and production.  According to him, each district has its own land valuers who undertake the groundwork and later forward it to the ministry for review.

“The Land Act, Section 59, provides for the District Land Boards to submit rates of the respective districts every year,” he said in a written statement to Oil in Uganda. “One of their functions is to compile a list of compensation payable in respect of crops, buildings of a non-permanent nature or any other thing that deserves repayment. This is what we use to compensate the locals.”

Clarifying ownership

Dennis Obbo agrees that “payment is based on what figures they [districts] come up with. We only adopt an alternative matrix if the prices are unfair.”  District leaders, he says, should not blame central government for unfair payments.

However, Mr. Obbo also draws attention to lack of information at local level as a cause of delays and potential conflict over compensation payments.  Often, he says, “the locals lack certificates of ownership, neither do they know what property must be compensated and by who. There is lack of sensitization on such matters.”

Certificates of ownership can be issued to people who own customary land but lack land titles. To obtain one, Mr. Obbo says, the local leadership should help the locals and take them through the process, which should not last more than two months.

He outlines the procedure as follows:

-An individual who claims to own property picks an application form from the District Land Board, at a fee of 5,000 shillings.

-Once filled out with the name of the applicant and details about the land, it is returned. The district Land Board then calls a meeting with local elders, to confirm the boundaries of the land.

-If confirmation of ownership is ascertained, a certificate of ownership is sent to the Government Valuer’s Office in Ministry of Lands for confirmation and stamping.

-The stamped certificate is then sent to the rightful owner and can be used to lawfully sell or lease land, and to support claims for compensation.

According to Mr. Obbo, if all the necessary documentation is in place, the compensation process should take no more than thirty working days.  “The process is short, but it is frustrated by lack of sensitization to the locals. They do not know where to go and this is the reason why we have delayed to have them compensated.”

But while this seems clear enough in theory, it is also clear that in practice, the system is not working effectively enough to satisfy all those affected by the oil industry.

As oil field development ramps up, complaints and resentments are likely to multiply if the compensation process is not made more transparent.


Report by FN and BO