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Oil refinery threatened

By Haggai Matsiko

World Bank sucked into wrangle over compensation budget of Shs74 bn

Battle lines have been drawn between the government on one hand and activists and locals over the compensation and resettlement of residents to be evicted to create space for oil refinery infrastructure in Hoima, western Uganda.

At the centre of the fight is how Shs74 billion the government put aside as compensation for those displaced is to be spent.  Over 7,118 locals on 29 square Kmsare affected.

President Yoweri Museveni has for almost two years firmly insisted to oil companies that Uganda must get a refinery. The 60,000 barrels per day (bp/d) plant appeared to be on course when agreements were signed in April between the government, Tullow, CNOOC, and Total.


Shortly after that, on Oct.8, government announced it would release a Request For Qualifications (RFQ) to identify a Lead Investor/Operator for the development, implementation and operation of the oil refinery.  The fight over compensation is putting the project in jeopardy.

Security operatives, intelligence officers and top government officials have been lined up in Kampala and Hoima to ensure nothing gets in the way of the refinery.

These, however, have to deal with an army of locals and activists demanding prompt, adequate, and fair compensation as required by the constitution.

Instead, The Independent has learnt, about 20% of the money has been allocated to consultants and their activities.

Only Shs 54 billion will go into compensation, while Shs 3.6 billion is for Resettlement Action Plan (RAP) activities, Shs 3.7 billion is fees for Strategic Friends International (SFI) which prepared the plan and Shs 8.9 billion is for contingency. This information is contained in the tightly kept RAP documents prepared by SFI on behalf the Energy Ministry.

There are complaints that although most of the land affected is communal, some powerful individuals have secretly acquired land titles and are using them as a basis for compensation. The locals say over 10 titles that have been issued although President Museveni put a ban on issuance of titles in the Bunyoro region.

In other cases the property of residents has been undervalued, while over 80% of claimants who are illiterate and poor are being harassed and forced by government officials to sign documents without sensitisation or understanding. Global Rights Alert, an NGO, has documented the grievances in a report titled Sleepless Nights.

It notes that while the oil compensation is modelled around the International Finance Corporation (IFC) and World Bank standards for the resettlement of the communities in the project affected areas but the implementation has fallen short.

It points out that the Resettlement and Community Development Action Plan (RCDAP) of the Bujagali Interconnection Project followed the same guidelines but when its proper implementation failed, cases ended up in court. The World Bank was forced to settle out of court.

“The implementation by the oil refinery implementing agency has demonstrated that what is on paper in terms of a developed policy framework is different when it comes to implementation,” the GRA report says.

The NGOs and victims have already prepared affidavits to be presented in court if their issues are not addressed. They want Robert Kasande, the Project Manager, refinery development at the Petroleum Exploration and Production Department (PEPD), technocrats in the ministry of Energy, and government officials punished for wrong-doing.The government officials are accused of attempting to defraud the bona fide claimants.

The World Bank Institute (WBI), which is the capacity building side of the World Bank in Washington D.C. has also been sucked into the controversy.

Kasande, the Project Manager, says for a project of the magnitude of US$3.5 billion, the World Bank’s finance bodies like the IFC (International Finance Corporation) or IDA (International Development Agency) have to get involved. He said these World Bank bodies, will be involved in the funding of the refinery. The compensation trouble becomes dangerous because these institutions are averse to controversy.

As such, Kasande told The Independent on the sidelines of a recent national meeting on oil in Kampala that the civil society organisations and residents are attempting to frustrate the project.

Global Rights Alert (GRA) and the African Energy Institute for Governance (AFIEGO) organised the meeting on Oct. 4 at which some Members of Parliament, activists and some victims criticised Kasande and the implementation of the compensation.

“The government sensitised us, we welcomed the refinery but what we were told is not what is happening,” one of the victims; Abigaba Esther told the meeting.

“We have been accused of fighting the refinery; that is not true, we welcome the refinery but a person like me has children, does the government want me to eat them?”

Abigaba’s three-bedroomed house has been valued at Shs 1.4 million and her latrine at Shs 60,000 for her toilet.  She is angry.

“If I gave you this money would you construct this house for me?” she asked Kasande.  Christine Nyangoma has a house in Kyapaloni village but the RAP implementers are not compensating her for it. Instead they have valued her land only at Shs 230,000. In the same town, another local with a plot of 0.2 acres, was paid Shs 80,000.

Rukampena was offered Shs2.6 million for a commercial building of three shops and Shs 46 million for his other three buildings, whose construction alone, he says, cost him over Shs60 million.

Throughout the 13 affected villages, an acre of land is being compensated for between Shs3.5 to 4.5 million. Since talk of the refinery started, the market value shot to between Shs7 to 10 million, locals say.

One Grace from Kitegwa village has about an acre of sugarcane but she will get Shs8, 000 for it yet, she says, she has been earning Shs1, 000 for just one stem. If she owned a mango tree like many do, she would also fetch only Shs 80, 000. A mango tree takes over 5 years to start yielding.

There are several other complaints, an acre of banana plantation, an acre of coffee and an acre of maize are all valued at less than Shs 2 million. Since over 90 per cent of the locals are subsistence farmers, these issues have affected almost all of them.

Arrogant officials

The victims accuse the contractor, Kosea Wamboka, who heads SFI and the ministry of Energy officials of arrogance and handling the compensation and resettlement poorly.

“If this is how the consultant and the government has been dealing with people, I pity them,” a former government minister of Lands Kasirivu Atwooki warned, “you might be saying it is just a few people complaining but these few can become many, we all know how the NRA war started.”

“We have to stop pretending everything is okay,” Bullisa MP Stephen Birahwa said, “nothing is okay… Let us not blame citizens whom we are suffocating.”

The meeting summarised the tension between the locals and critics on one side and the government and its contractor on the other.   The locals have petitioned the Speaker of Parliament and the Uganda Women Parliament Association (UWOPA) have in a motion also recommended that the resettlement process be halted, building even more tension.

“I don’t know but this group of 20 has been consistently against what we have been doing,” Kasande told the meeting, “when people have an agenda it is very hard to convince them.”

His contractor, Wamboka, said the victims were being “greedy” and that his company, “which has a name to protect” has followed international standards in the whole process.

“82 per cent of the people,” he said, “have signed and accepted the process, it is just a small number of people that haven’t.”

Kasande says the World Bank involvement means international standards have to be met.

“That is why I told the contractor to ensure that the process is proper,” Kasande said.

In an earlier meeting at the PEPD offices in Entebbe with activists, Kasande was upset that the activists had invited two officials from the WBI into the meeting without informing him.

The activists were proposing that his team halts the resettlement until all issues are resolved. “You cannot jeopardise a 3.5 billion dollar project,” Kasande had told them.

World Bank involvement

The WBI has funded the development of a community-based tool for monitoring compensation and resettlement programmes that appears to be at the centre of the controversy. The tool was developed by the Energy and Extractives cluster of the Uganda Contracts Monitoring Coalition.

Implementation of the tool involves a local committee of 20 locals to measure the degree of compliance with the legal framework and international safeguards.

Among the many other things, for instance, the tool was intended to find out whether the locals were given an opportunity to negotiate and for how long.

But when the people behind the tool went to PEPD for permission to access the refinery area, officials at PEPD refused.

The activists went ahead with the project to the dismay of many but not without threats.  “You want to jeopardise the funding of the refinery,” a security operative warned the coordinator of the committee, “this committee of monitors must be disbanded.”  The Hoima District Internal Security Organisation (DISO) accused the group of insolence.  “We have the power to arrest you and deregister you,” an External Security Organisation (ESO) also allegedly threatened.

But not even the several meetings with security operatives from security and intelligence bodies, Energy Ministry officials could stop the committee.

In the course of the process, the activists behind the tool noted a number of issues with in the compensation and resettlement processes.

Such criticism has in the past led some projects in which the World Bank was involved to either be halted or delayed. In one case, the America’s power giant, AES Corporation was forced to close and abandon its investment in Bujagali power dam following insistent criticism.

New Forest Company, a British commercial tree company also attracted a lot of backlash following alleged eviction of about 20,000 people by state operatives to give it land to plant its pine trees. Some of its investors even announced withdrawal of their funds from the project. The company had to start a process to resolve the issues out of court.

Kaweeri Coffee Company, another company has for about 12 years been battling a group of 2000 locals that it had evicted from land in Mubende to establish a commercial coffee plantation.  Government has for long been angry with activists, whom officials accuse of undermining the oil industry.

Recently, the Minister of Internal Affairs, Gen. Aronda Nyakairima, travelled to the oil regions of Hoima and Bullisa to make the government’s message clear.

“Some NGOs (Non-Government Organisations) are reported to be instigating people not to allow government to compensate them in the area where government intends to set up a refinery. We find that disturbing,” he told journalists in Bullisa.

He said the government was investigating the NGOs.   “If we find them to have conducted activities for which they were not registered, we may consider withdrawing their licenses.”

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