Tullow is set to sell a substantial part of its assets in Uganda to Total E&P Uganda and CNOOC Uganda – a farm-down that attracts capital gains tax.
President Yoweri Museveni and the Chief Executive Officer (CEO) of Tullow Oil plc have agreed a deal that will enable oil company enjoy a phased payment of capital gains tax accruing from the sale of part of its assets in the Albertine graben. Tullow Uganda Ltd –a subsidiary of Tullow Oil plc in January 2017 announced the sale of a substantial part of its assets in Uganda to Total E&P Uganda and CNOOC Uganda Ltd in a farm-down that attracts capital gains tax.
According to Tullow Oil plc’s full year statement, the Chief Executive Officer of Tullow Oil plc, Mr Paul McDade and President Yoweri Museveni met on January 19th, 2019 in which the issue of capital gains tax from the sale of part of the company’s assets in Uganda was discussed. The 30-page company full year results report was released on February 13th, 2019. The meeting was also attended by the CEO of Total S.A. In the meeting, Tullow Oil agreed the principles for Capital Gains Tax on its $900 million (approximately Shs 3.3 trillion) farm-down to CNOOC Uganda and Total E&P Uganda. Cabinet gave Tullow Oil’s farm-down to Total E&P Uganda and CNOOC Uganda a green light. “Following meetings in January 2019 between the CEOs of both Tullow Plc and Total S.A, and President Museveni of Uganda, the government and the Joint Venture Partners are now engaged in discussions to finalise an agreement reflecting this tax treatment that will enable completion of the farm-down to take place,” the financial statement reads in part.
The report adds, “Any Capital Gains Tax is expected to be phased and partly linked to project progress. At completion of the farm-down, Tullow anticipates receiving a cash payment of $100 million and a payment of the working capital completion adjustment and deferred consideration for the pre-completion period of $108 million.”
A further $50 million of cash consideration will be made and is anticipated to be received when the Final Investment Decision is taken on the development project, possibly mid this year or thereabout. The deal is meant to avoid a possible dispute between government and Tullow Oil over the payment of the capital gains tax. In 2012, Tullow Oil was embroiled in a dispute with the tax body – Uganda Revenue Authority over payment of capital gains tax following the farm-out by former Heritage Oil Uganda in favour of Tullow Oil Uganda, which led to protracted litigation. Uganda came out as the victor and the payment was effected accordingly.
Final Investment Decision (FID) The report also notes a delay by Joint Venture Partners to reach a Final Investment Decision (FID). “The joint venture partners – Tullow Oil Uganda, Total E&P Uganda and CNOOC Uganda continue to work towards reaching FID for the development project around mid-2019,” the report reads in part.
Mark MacFarlane, the Executive Vice President of Tullow Oil for East Africa noted in the report, “This year the East Africa team will be driving hard towards two Final Investment Decisions on our East African projects which have the potential to deliver over 50,000 barrels of oil per day of net production to Tullow by the early 2020s,” he said. Mark MacFarlane emphasised that Tullow’s East Africa team is making good progress on delivering the potential the projects offer. Edward Ssekika Edited by Flavia Nalubega Edited by Didas Muhumuza Oil.Uganda@actionaid.org
Auditor General notes the money was withdrawn from the petroleum fund without following procedures laid down in the Public Finance Management Act, 2015.
In his latest report to Parliament, John Muwanga, Auditor General has faulted the Ministry of Finance, Planning and Economic Development (MoFPED) of irregular withdrawal of Shs 125 billion from the Petroleum Fund.
In the report to Parliament for the Financial year ended 30th, June 2018, the Auditor General notes that money was withdrawn from the Petroleum Fund and transferred to the consolidated fund in total disregard of the Public Finance Management Act, 2015. The 450-page report containing the disturbing news was released in December, 2018.
Section 58 of the Public Finance Management Act, 2015, requires that withdrawals from the Uganda Petroleum Fund to the Uganda Consolidated Fund to be made under authority granted by an Appropriation Act. Section 59(3) of the Public Finance Management Act, ring fences petroleum revenues to financing infrastructure and development projects only. However, from the report, it is not clear what kind of expenditures the money was used for.
“I noted that management transferred Uganda Shillings125 billion on 2nd, November 2017, from the Uganda Petroleum Fund to the Consolidated Fund, without explicit mention of the Uganda Petroleum Fund in the Appropriation Act, as a source of funding,” the report reads in part. Instead, the withdrawal was premised on the medium term expenditure framework for the financial years, 2015/16-2021/22 submitted to parliament which includes the different sources of revenues financing the budget.
“In the absence of guidance from the Appropriation Act, which would indicate the activities for which the funds have been budgeted, there is no assurance as to whether the funds were used to finance infrastructure and development projects of Government, as provided for under Public Finance Management Act, 2015,” the report reads in part.
According to the report, in response, the Ministry of Finance explained in the management letter that the Appropriation Act, provides for only expenditures but does not reflect the various sources of funding for the budget, and that discussions are ongoing to review the presentation of the Appropriation Act to incorporate funding sources.
In the report, the Auditor General advised the responsible Ministries to align the legal framework to sufficiently provide for a format of the Appropriation Act which shows the purpose, activities and amounts of the Petroleum Funds to be appropriated under the Consolidated Fund, or to be transferred to the investment reserve account.
The Auditor General revelations continue to cast doubt on government’s willingness to transparently manage oil revenues. For instance, in 2017, a report of the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) revealed that $633.7 million dollars (approximately Shs 2.2 trillion) oil revenues had been spent under unclear circumstances.
The COSASE report didn’t give details how and where the money had been spent, but the Secretary to the Treasury in a letter, stated it was spent on the construction of Karuma hydro power plant. However, the Cabinet of Uganda approved the country’s ascent to the membership of the Extractive Industries Transparency Initiative (EITI) thereby providing hopes for more transparency and accountability in the extractive sector, only if the initiative shall be properly applied to its true purpose. By Edward Ssekika Edited by Flavia Nalubega oil.Uganda@actionaid.org
The National Environment Management Authority (NEMA) is seeking public comments on the Environmental and Social Impact Assessment (ESIA) report for the Tilenga oil project.
The name Tilenga is derived from two local names for the Uganda Kob (Antelope) which is called “Til” in Acholi and “Engabi” in Runyoro-Rotoro.
A notice which has been pinned on public notice boards in Buliisa district indicates that NEMA received the ESIA from Total E&P Uganda and Tullow Uganda operations Pty Ltd for the proposed Tilenga project.
Under the Tilenga project, the Government through its licensed oil companies has discovered commercially viable oil deposits north of Victoria Nile in Murchison falls national park and south of Victoria Nile in Buliisa district.
The project includes jobi-Rii, Gunya, Ngiri, Kasemene, wahrindi, Nsoga, Kigogole oil fields. Composition According to the project documents which oil in Uganda has seen, the Tilenga project is composed of well pads, a central processing facility and other associated facilities, production and injection network of pipelines and cables, Bugungu airstrip, Tangi operation camp, a water abstraction system, victoria Nile crossing, river Nile pipe crossing and some roads.
The project also includes temporary construction camps, construction support base, a logistical check point in Masindi and borrow pits.
“The public is further notified that the outcomes of the public review will contribute towards making a final decision of the project in accordance with the Environment impact assessment regulations” a notice released by the NEMA Executive Director Tom Okurut reads in part.
According to the notice, members of the public have been asked to submit their comments by November 9th 2018. CSO Petition NEMA 13 civil society organisations have asked NEMA to hold public hearings to enable locals have an input in the studies.
“It is through public hearings that oil host and affected communities, the poor, marginalised and illiterate will be able to make comments on the ESIA to enable NEMA make a decision based on the collective input of all concerned stakeholders” the CSOs said in a joint letter to the NEMA executive Director.
According to the CSOs which are working to prevent the impacts of oil on biodiversity from Buliisa, Hoima, Kasese, Greater Masaka, South Western Uganda and Kampala, they are concerned that in the notice, NEMA did not indicate that it will call for public hearings before making any decision on the ESIA.
The concerns of the CSOs are contained in a letter dated October 17, 2018 which was submitted to NEMA by the AFIEGO Chief Executive Director on behalf of the CSOs.
The Environmental Impact Assessment (EIA) Regulations of 1998 mandates NEMA to call for a public hearing where there is controversy or where a project has trans boundary impacts, the CSOs argued.
“The Tilenga oil project is controversial and will have trans boundary impacts. The project’s activities will include drawing of water from Lake Albert, whose boundaries remain a challenge between Uganda and the Democratic Republic of Congo (DRC). It should be noted that even the existence of many agreements including the Uganda Zaire 1990 Agreement, the 2007 Uganda-DRC Ngurdoto Agreement and others whose main objective was to address the peace and security challenges in the Uganda-DRC border areas through among other things providing for a framework for benefit sharing and conservation of shared resources such as the Lake Albert waters, fish and others have failed to achieve lasting results” Dickens Kamugisha, the Chief Executive officer of the Africa institute for Energy Governance(AFIEGO) said.
The CSOs warned that if the Tilenga project is not well handled, it may worsen the conflicts and loss of lives as well as environmental destruction in Uganda and the DRC.
“We need public hearings to ensure effective public consultations that can build consensus not only among Ugandan stakeholders but also stakeholders across the borders who are likely to be affected by the Tilenga project” said Kamugisha, a lawyer.
The CSO stated that available evidence indicates that NEMA has the skills and interest to do a good job but it cannot effectively play its role amidst weak and outdated laws.
It is unfortunate that for over four years, government and parliament have failed or ignored the need to complete the enactment and formulation of the new environmental laws such as the National Environment Bill of 2017, the draft EIA and Strategic Environment Assessment (SEA) regulations of 2017, the Uganda Wildlife Bill and others. Without such relevant laws to improve NEMA’s independence, funding and penalties for environmental offenders, NEMA can hardly operate rightfully.
‘It is especially unfortunate that todate, as government and oil companies are finalising major oil decisions that will have long lasting environmental and social impacts, there is no specific provision in our current laws including the 1995 National Environment Act, the Uganda Wildlife Act and others that specifically provides for NEMA to reject oil activities even in the most critical biodiversity areas such as Lake Albert, River Nile, Budongo Forest, Murchison Falls National Park, and others of national and international importance,” the petition which was received and stamped by NEMA on 18th October reads in part. Demands
“NEMA should use its powers not to issue any certificate of approval for oil projects as a condition to force parliament and government to complete the new environmental laws and regulations” the petition stated.
The CSOs have asked government to establish a multi-stakeholder committee comprised of actors from government, the private sector, religious and cultural groups, CSOs, the academia and others to act as an independent multidisciplinary oversight body to promote compliance with environmental conservation tools such as EIA, SEA, ESIA.
The CSOs have further asked NEMA to delay any decision to issue a certificate of approval for the Tilenga ESIA until the new environmental laws and regulations are put in place by government and parliament. This will help the country to stop engaging in oil activities based on a weak and outdated environmental legal framework, the petition added.
By Oil in Uganda correspondent, Bunyoro
He describes artisanal miners as “a menace” to the mining sector
In a new twist that arguably contradicts government rhetoric on Artisanal and Small Scale Miners (ASMs) in the country, the Director, Directorate of Geological Survey and Mines (DGSM) in the Ministry of Energy and Mineral Development, Edwards Kato, has ordered all illegal artisanal miners to vacate the respective mines.
“Those people [artisanal miners], still joking should style up. Now, I’m not only a director [in the ministry] but also a commander of the Minerals Protection Unit of the Uganda Police Force. So, those illegal artisanal miners still behaving like those in Mubende [who were evicted], they should pack and vacate the mines, otherwise, my police force will them help to pack,” Mr Kato said.
With the Mineral Police, he emphasized the “madness” of artisanal miners will stop. Kato praised the “Chunga Mazingira Operation”, sanctioned by President Yoweri Museveni in which more than 60,000 artisanal gold miners in Bukuya and Kitumbi sub counties in Mubende district were evicted to pave way for an investor to develop the mines.
The eviction left many artisanal gold miners counting loses without any source of livelihood. The artisanal miners have since sued Attorney General [Government] seeking compensation for their property destroyed during the brutal eviction jointly carried out by the army and police.
On August 7th, this year, the Inspector General of Police (IGP), created a unit known as Mineral’s Protection Police, within the police force. Headed by Ms. Keigomba Jesca, the Unit is charged with implementing policies, plans and strategies for effective security of minerals in the country. The unit was formed days after the army and police evicted artisanal miners in Mubende district. Minerals have a direct impact on revenue, immigration, law and order as well as environmental management.
“Artisanal miners have been a big thorn in the mineral’s sector. They are a total menace,” Mr Kato said.
Kato was on Wednesday 4th, October this year speaking at the 6thAnnual Mineral Wealth Conference at Kampala Serena Hotel. Running under the theme “Minerals: Knocking on the door to cause economic transformation in Uganda,” the conference is organized by the Uganda Chamber of Mines and Petroleum in collaboration with the Ministry of Energy and Minerals Development.
According to a report titled, “Understanding Artisanal and Small Scale Mining (ASM) Operations in Uganda,” by African Center for Energy Policy (ACEMP), 2016, there are more than 250,000 Artisanal and Small Scale Miners in Uganda. Eviction of these miners will exacerbate unemployment and impoverishment, especially among the youth and women who work in the mines.
Though most artisanal miners do their work without any license, which is illegal, evicting them from the mines is not a solution. They instead need to be helped to formalize their operations and licensed. Under section 4(1) of the Mining Act, to prospect, explore, mine, retain or dispose of any mineral without a license, any person mining without a license, upon conviction is liable to a pay fine of Shs 500,000= shillings or imprisonment not exceeding one year. In case of a company, the fine is not exceeding Shs 1 million.
However, in a tongue-in-cheek presentation, Mr Kato pledged to organize artisanal miners. “We need to regulate and formalize Artisanal and Small Scale Mines (ASMs), they have become a menace all over. Government shall organize and license artisanal miners and transform their activities into formidable and viable business entities,” he said contradicting himself.
Artisanal Miners have formed associations in a bid to formalize their mining activities. However, government has been reluctant to recognize these associations. For instance, artisanal gold miners in Mubende formed and registered Ssingo Artisanal and Small Scale Miners Association. The association applied for exploration licenses. The Directorate of Geological Survey and Mines (DGSM) didn’t decline to grant artisanal miners a license, but did not even give them feedback. Failure to give feedback contravenes Mining Act, 2003.
“We shall ensure that artisanal mining is a preserve for Uganda citizens and encourage joint ventures for small scale mining operations,” he said.
In a clear contrast and manifestation of lack of coordination, Mr. Alain Goetz, the Chief Executive Officer (CEO) of African Gold Refinery (AGR), seemed to praise artisanal miners for their constant supply of gold to the refinery. He said his company will work closely with artisanal mining communities in Mubende to ensure that artisanal miners maximize their returns, perhaps not aware that they were evicted from the mines.
A CASE FOR KARAMOJA EXPLORATION
Dr Elly Karuhanga, the chairman Uganda Chamber of Mines and Petroleum (UCMP) asked government to earmark $ 20 million dollars for the geophysical Aerial survey of Karamoja. The area was left out due to insecurity then. “Why can’t we as a country mobilize $ 20 million dollars (approximately Shs 70 billion) and explore Karamoja, a basket for our mineral” Hon. Karuhanga said. Geophysical Aerial survey help to determine the minerals available in an area.
On her part, Speaker of Parliament, Rebecca Kadaga pledged to “harass” the Ministry of Finance, Planning and Economic Development to find the money to finance geophysical Aerial survey for Karamoja. “We can’t find $ 20 million dollars? Really, I think this is lack of focus and commitment towards the mining sector,” Kadaga said.
By Edward Ssekika
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.
The muddled procurement of the lead developer for the oil refinery could have played a role
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.
Kawunde Patrick has been in the gold mining business for three years now. Previously he was a timber dealer and before that he traded in South Sudan until unrest broke out. On the fateful morning of the Mubende mines eviction, he watched in horror as his livelihood was swept right from under his feet.
The 35-year old father of five had a pit in the mines. On that fateful morning his boys were already in the pit working when he was ordered by angry soldiers to get them out and ensure no one stayed down. The miners had been given two hours – though most swear it was hardly an hour – to vacate the mines. Pandemonium reigned as over 50,000 people gathered whatever they could to flee.
Preoccupied with getting his boys out of the pit Kawunde had no time to pick anything from his house. By the time he got there the padlock was broken, his house ransacked.
“Soldiers stopped me from taking anything. I lost three generators; three blowers that supply oxygen down the pit and four drilling machines,” Kawunde painfully narrated his ordeal.
He valued the generators at Shs3million each; two blowers at Shs2.2million each and a smaller one at Shs700,000. The drillers together cost Shs4.4million.
“I watched as Sh16million of my capital was snatched out of my hands,” he said resignedly with tears welling up in his eyes. A week later he found out his Sh9million ball mill had been taken too.
“In my lifetime I have never seen anything like this,” he said in a distant voice.”
Mr Kawunde is just one of many artisanal miners that lost property and money during the eviction.
“People left money in their houses as they fled,” said another miner who identified himself as just Alex. Alex was one of so many business people who fled off the gold value chain. He owned a lodge and bar. He had just spent Shs6million on iron sheets to construct more makeshift rooms. Like many others he left his iron sheets in the mines.
“If I had not bought those sheets I would at least have something to start with. I left everything of mine in the mines. I have not changed clothes since we were evicted,” he said.
Another miner of Rwandese origin had his Toyota Premio confiscated by police when he was asked to produce his national ID which he had misplaced in the fracas.
Led by Ntare Sipriano, the LCI chairman Lujinji B, an angry group of miners still camped in the trading center just outside the mines said the military men told them they had orders to take over the place and confiscate everything.
“A few lucky ones had managed to get out some property before the place was put on lockdown,” said one of them.
To the ordinary eye artisanal gold miners spend day in and out torturously excavating stone and go through strenuous means to extract gold from the ore. Yet in fact the clueless miners are counting losses since their eviction early this month. Clueless because every government stakeholder they believed had given them assurance of their continued operations right from the fountain of honour has betrayed them.
Mr Bukenya Michael, the Bukuya constituency MP, said they had ‘done everything possible’ to stop the evictions, lobbying in higher offices but were powerless to stop anything.
In his State of the Nation address of 2015 President Museveni assured the miners in Mubende their plight would be addressed. For five years now the miners have waited for a location license in vein. This year, with the eviction looming, negotiations were ongoing as politicians shuffled between State House and Mubende.
Mr Emmanuel Kibirige, the secretary Singo Artisanal and Small Scale Miners Association said Benny Namugwanya, the Woman MP Mubende, was supposed to have given them feedback from a consultation meeting she had attended in Kampala over their plight. Other than what had transpired they were expressly evicted albeit earlier directives to vacate that they mostly took casually.
“We have lost our lives and livelihood. Our government has done it again to further marginalize the poor. Thanks NRM. Our property worth millions is in the hands of soldiers. Only two hours to shit items after working for ten years,” Kibirige says bitterly.
Kibirige wondered what would become of people’s property as there wasn’t any sort of documentation taking place.
“I have an acre of land I bought in that place and have a land sale agreement for it. What has it got to do with the mines? We would not have refused to leave the mines but should have let us take our property,” Kibirige, who sustained a broken leg in the fracas, says.
After years of toiling several of the miners own pits. Inclusive of paying rental fees to landlords, hiring generators and drilling tools, and labour, operating a pit cost up to Sh500,000 daily, according to Ivan Kawuma, another miner. Kawuma owned a pit more than 300 feet deep after working for more than five years.
What has however left several people baffled is their machinery that they were using in their operations. People were not allowed to take their machinery. Miners have also reported seeing a military police truck driving out of the miners with generators, blowers, and other equipment like drillers.
When asked about people losing property Mr Byaruhanga Patrick, the district police commander Mubende, said those were exhibits to adduce as evidence of illegal mining otherwise people had managed to carry out all their other belongings.
For now the miners are waiting and hoping that they will be allowed back to operate or at least seize opportunities if an investor starts operations.
By Robert Mwesigye and photos by Josephine Nabaale
The Petroleum Fund currently has $ 72 million dollars and Shs 10bn on its Shillings account instead of the $709 that was collected
At least Shs 2 trillion oil revenues has already been spent on infrastructure and other energy projects, a report of the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) reveals. However, the report adopted by parliament last week, does not give details of how and where the money was spent, but the Secretary to the Treasury in a letter, states the money was spent on the construction of Karuma hydro power plant.
One of the terms of reference for the Committee was to establish all revenues received in the Petroleum Fund. Accordingly, during the investigations, the Committee requested the Office of the Auditor General (AOG) to conduct a special audit to establish all revenues received by government in respect of the Petroleum Fund. After the audit, the report notes, it was discovered that so far, government received $709 million dollars in petroleum revenues between 2011 – March, 2017.
“The Committee established that a sum of $709 million dollars which has been ring fenced for infrastructure and energy development, accrued to the sector since petroleum activities started,” the report reads in part. However, as at 14th March, 2017, the Petroleum Fund had only $ 72.5 million dollars on its dollar account and a paltry Shs 10bn on its Shillings account.
“Out of this, $633.7 million dollars (approximately Shs 2.2 trillion) was transferred to the Consolidated Fund [and spent on Karuma hydro power project] while the sum of $72.3 million dollars is being held in dollar account and Shs 10bn Shillings account in the Petroleum Fund.
The Committee report reveals that by the time the Public Finance Management Act came into force in February, 2015, the oil revenue account in Bank of Uganda had a total of Shs 1.36 trillion, which was transferred to the consolidated fund.
In the report, MPs question, why Shs 1.36 trillion was transferred from the Oil Revenues Account in Bank of Uganda to the Consolidated Fund, instead of transferring it to the Petroleum Fund as required by the Public Finance and Accountability Act, 2015, as the fund’s opening balance.
However, in a letter dated June, 24th, 2015, jointly signed by Mr Keith Muhakanizi the Secretary to the Treasury and Mr Lawrence Ssemakula the Accountant General, and seen by our writer, the duo directed the director in charge of Banking at Bank of Uganda to transfer the money, close the account and open a new account in the name of the Uganda Petroleum Fund.
“Prior to the enactment of the PFMA [Public Finance Management Act, 2015], the oil funds on account were earmarked to support the financial year 2014/2015 budget for Karuma hydro power plant, and were released from the consolidated fund and thus need to be refunded to the Uganda Consolidated Fund (UCF),” the duo wrote and further explained, “In order to operationalize the Petroleum Fund, there is need to open bank accounts for the Fund, where all oil revenues received by government from 6th March, 2015 shall be deposited. I authorize you to open a Uganda Shillings (UGX) and dollar (USD) accounts in the name of Uganda Petroleum Fund.”
According to the letter, the principal signatories to the Petroleum Fund are; Mr Keith Muhakanizi, Mr Patrick Ocailap (deputy Secretary to the Treasury), and Mr Lawrence Ssemakula, the Accountant General.
“The Committee recommends close monitoring and supervision of the activities of the petroleum authority and the Uganda National Oil company Limited. The relevant committees of parliament should receive quarterly reports from the Authority and National Oil Company,” the report recommends.
In January, 2017, the Committee chaired by Hon. Abdul Katuntu (Bugweri MP) was tasked to investigate the controversial Shs 6bn reward to 42 government officials for winning a tax dispute between government of Uganda and Heritage Oil and Gas Limited an arbitration tribunal in Landon in 2015.
The gist of the investigation was to establish the legality of the Shs 6bn rewarded to 42 government officials for their effort in winning a tax arbitration case between government of Uganda and Heritage Oil and Gas Limited in Landon.
In 2010, Heritage Oil and Gas Company Limited sold its participating stake in the Albertine Graben to Tullow Uganda Limited at $ 1.45 billion – a transaction that attracted Capital Gains Tax. However, Heritage objected to tax assessments in the Tax Appeal Tribunal and also initiated arbitration proceedings in Landon against government of Uganda under the United Nations Commission for International Trade Law Arbitration Rules, 1976. The company sought a refund of all monies collected as Capital Gains Tax.
In February 2015, the tribunal dismissed Heritage’s application and awarded government of Uganda $ 4 million dollars in costs incurred in defending the application. The committee established that government hired Curtis Mallet – Provost, Colt &Mosle LLP, a British law firm to represent government of Uganda in the arbitration proceedings at a cost of $8.6 million dollars.
Following the victory, the President acting on a request from senior government officials rewarded the 42 officials with Shs 6bn for their contribution.
The committee observes that the selection of the beneficiaries was not all inclusive. ‘For example, Bernard Sanya, the initiator of the tax two assessments was neither on the first list nor the second list of the beneficiaries. According to the report, there was a lot of informality and arbitrariness in the selection of beneficiaries.
“The committee concluded that the Shs 6n reward was contrary to standard practices of rewarding public officers, as provided for in the law. The President’s approval of the Shs 6bn was bonafide. However, it was an error of judgement,” the report reads.
The Committee recommended that all funds paid out of URA account to beneficiaries of the “handshake” should be refunded and all officers who flouted the law should be held accountable.
Responding to the report, Ali Sekatawa, Assistant Commissioner for Litigation, one of the beneficiaries of the handshake threatened to petition court over the report, arguing that the Committee selectively evaluated evidence before it, and thus came to wrong conclusions. He said parliament has no powers to order him to refund the money, since it was not given parliament. It came from URA’s account that had been appropriated by parliament. Parliament unanimously adopted the report.
“The Committee further established that whereas the costs awarded to URA by the Tax Appeals Tribunal and the High Court of Uganda has not been taxed and recovered, up to approximately $ 15 million has not been recovered. The bill of costs is yet to be filed. The International Arbitration Tribunal in Landon did award Government of Uganda costs amounting to $4 million which also remains unrecovered,” the report reads in part.
The report asks the Attorney General to recover the $ 4million dollars as costs awarded by the arbitration tribunal within 90 days from the date of tabling the report. However, Ali Sekatawa says it will be difficult for government to recover the costs from Heritage Oil and Gas Limited, since the company was delisted from the Landon Stock Exchange.
Following the revelations by former Energy Minister, Syda Bbumba, that she signed the Production Sharing Agreements (PSAs) without reading through the agreements, the report recommends that politicians should be barred from signing such agreements.
“Parliament should revisit section 8 of the Petroleum (Exploration, Development and Production) Act, 2013 with a view of amending it and provide for technical people to be signatories to PSAs. All recoverable costs incurred by oil companies should be submitted to parliament quarterly,” he report reads.
Weighing in on the report, Odonga Otto (Aruu MP), said “The good thing we have a report adopted by parliament, so even if it takes 10 years, the beneficiaries of the handshake will refund that money” he said.
By Edward Ssekika
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.
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.
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
CSOs have organised a dialogue slated for Wednesday the 26th April 2017
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