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  • Tullow’s Shs 3 trillion farm-down to Total and CNOOC terminated over a tax dispute

    Gov’t maintains that all the assessed taxes should be paid.

    The proposed farm- down of part of the assets of Tullow Uganda Operations Pty Ltd to Total E&P Uganda and CNOOC Uganda has been terminated following the expiry and non- extension of the Sale and Purchase Agreement (SPA), Tullow Oil Plc has announced. Tullow Uganda Operations Pty Ltd is a subsidiary of Tullow Oil Plc – a British oil giant.

    In the statement, Tullow noted that the company was unable to secure the extension of the Sale and Purchase Agreement (SPA) with its Joint Venture Partners – Total E&P Uganda and CNOOC Uganda Ltd despite previous extensions having been agreed upon by all the parties. In a brief statement, Tullow said it has been informed that its farm-down to Total E&P Uganda BV and CNOOC Uganda Ltd will terminate on August 29, 2019 following the expiry of the Sale and Purchase Agreement.

    “Tullow has worked tirelessly over the last two and a half years to complete the farm-down which was structured to re-invest the proceeds in Uganda,” Paul McDade, the Chief Executive Officer (CEO) of Tullow Oil Plc said in a statement.  McDade noted that Tullow committed to reducing its operated equity stake in Uganda.

    He added, “It is disappointing to report this news at a time when we are making so much progress elsewhere towards the growth of the Group with our recent oil discovery in Guyana and first export of oil from Kenya.”

    The termination of the transaction, McDade further said is a result of being unable to agree on all aspects of the tax treatment of the transaction with the government of Uganda which was a condition for completing the Sale and Purchase Agreement.

    “While Tullow’s Capital Gains Tax [CGT] position had been agreed as per the group’s disclosure in its 2018 Full Year Results, the Ugandan Revenue Authority and the Joint Venture Partners could not agree on the availability of the tax relief for the consideration to be paid by Total and CNOOC as buyers,” the statement reads in part.

    ENTER THE TAX DISPUTE

    In January 2017, Tullow announced that it had agreed to farm-down 21.57% of its 33.33% interests in Exploration Areas 1, 1A, 2 and 3A in Uganda to Total E&P Uganda and CNOOC Uganda Ltd for a total consideration of $900 million (Approximately Uganda Shs 3.2 trillion). The farm-down has to be approved by government upon satisfaction that the relevant taxes –  in this case, Capital Gains Tax has been paid.

    After the announcement, Uganda Revenue Authority slapped a $ 167 million (approximately Shs 617bn) tax bill on Tullow for its proposed farm-down. Tullow objected on grounds that given the costs it had incurred, $167m tax bill was not correct and that it intended to re-invest the money in the country– sparking a stalemate.

    As a result, Tullow sought for a political settlement to a tax dispute with President Museveni who in meetings with the company bosses insisted that the tax dispute should be settled with URA and not him.

    However, in the statement Tullow said the company will initiative a new sale process to reduce its 33.33 percent operated stake in the Albertine project. The termination of the transaction is likely to further delay the Final Investment Decision (FID). Joint Venture Partners had initially agreed to make a FID by the end of 2019.

    GOVERNMENT RESPONDS

    Weighing in, Robert Kasande the Permanent Secretary, Ministry of Energy and Mineral Development defended government’s position. He insisted that Tullow has to pay Capital Gains Tax from the farm down. “The government’s position is that the assessed tax should be paid in line with the laws of Uganda,” Kasande indicated in a statement.

    In another statement, Total said it was still committed to Uganda. “Despite the termination of this agreement [Sale and Purchase Agreement], Total together with its partners (CNOOC and Tullow) will continue to focus all its efforts in progressing the development of the lake Albert oil resources,” Arnaud Breuillac, Total’s President in-charge of Exploration and Production said.

    By: Edward SsekikaEdited by Muhumuza Didas

  • Parliament calls for stringent fiscal rules on the management of oil revenues

    The move is meant to curtail government’s uncontrolled withdrawals from the Petroleum Fund to finance budget deficits and/or priorities. 

    Members of Parliament on the Natural Resources Committee have called for an amendment of the Public Finance Management Act to introduce a cap on how much oil revenues can be withdrawn from the Petroleum Fund to finance budget priorities.

    The MPs proposal is contained in the report of the Parliamentary Sectoral Committee on Natural Resources on the Ministerial Policy Statements and budget estimates for 2019/2020 dated April 2019.

    The introduction of a cap, MPs argue, will curtail the uncontrolled withdrawals of revenues from the Petroleum Fund to finance budget priorities.  For instance, according to the report Shs 125 and 200 billion was withdrawn from the Petroleum Fund to finance budget priorities for the financial years 2017/2018 and 2018/2019 respectively.

    According to the Appropriation Act, 2019, government will further withdraw Shs 445.8 billion from the Petroleum Fund to finance budget priorities for this financial year (2019/2020). As at December 30, 2018, the balance in the petroleum fund stood at Shs 288.7 billion.

    “Parliament should amend sections 58, 59 (1) – (7) of the PFMA, 2015 to introduce a cap on how much oil revenues can be appropriated to the consolidated fund or the investment reserve by Parliament,” the report reads in part.

    The Public Finance Management Act (PFMA) 2015, ring fences oil revenues for only infrastructure projects and development. However, the MPs noted in the report, it was not clear whether the oil revenues so far withdrawn from the petroleum fund have been spent on infrastructure projects. The Auditor General has noted in various reports, that there are no assurances as to whether the withdrawals from the Petroleum Fund are actually financing infrastructure and development projects because the Appropriation Act often does not disclose the purpose of the withdrawals.

    “The law [Public Finance Management Act, 2015] should be amended to sufficiently provide a format for the Appropriation Act which shows, purpose, activities and amount of petroleum funds to be appropriated under the consolidated fund or transferred to the investment reserve account,” MPs further recommend in the report. This will ensure that oil revenues will be managed for the benefit of current and future generations.

    MPs also noted the lack of an investment policy and profile to guide infrastructural and developmental projects eligible for financing by petroleum revenues.

    “An investment profile of oil revenues should be developed so as to guide the balanced growth and sustainable development of Uganda. This would be essential in profiling infrastructure and development projects eligible for financing by petroleum revenues,” MPs recommended.

    Weighing in on the proposal, Didas Muhumuza, the Extractives Governance Coordinator (and Managing Editor of the Oil in Uganda magazine and website) at Action Aid International Uganda (AAIU) said a review of the law is long overdue.  “The proposal is a good mechanism that will provide the much needed checks and balances for better control of the financial in-flows and out-flows from the Petroleum Fund and ensure better management of oil revenues for the present and future generations,” Muhumuza noted. 

    However, with weak enforcement of laws plus regulations, it remains unclear whether a review of the law can curtail government’s appetite for oil revenues.

    by: Edward Ssekika,Edited by Muhumuza Didas

  • Local governments demand exclusive rights to licence artisanal miners

    Mineral–rich districts of Uganda want to be granted exclusive rights to licence and regulate artisanal miners in their respective districts.  “In the new law, licensing of artisanal miners should be made a preserve of local governments in the mining areas,” Mr. John Asiimwe, Buhweju district chairman said.  Buhweju is one the gold mining districts in the country.

    Asiimwe was speaking during a consultative meeting on the Mining and Minerals Bill, 2019 at Oxford Hotel in Mbarara.  The meeting was organised by the Ministry of Energy and Mineral Development (MEMD) in partnership with Global Rights Alert – a civil society organisation.

    Asiimwe argues that the current Mining Act, 2003, centralizes licensing authority in the Directorate of Geological Survey and Mines (DGSM) which is even under-staffed to inspect and monitor the activities of artisanal miners.

    “This power [to licence artisanal miners] should be decentralised. Let licencing and regulation be left to respective districts. However, the bill maintains the old order of licensing that excludes local governments,” he emphasised.  

    In its current form, the bill takes away licencing powers of the Director of the DGSM and vests them in the Minister of Energy and Mineral Development except for building substances (development minerals). Asiimwe expressed gratitude that the bill at least recognises the rights of artisanal and small scale miners. The bill establishes a framework for licensing, regulation and monitoring of artisanal mining activities and collection of revenues from artisanal miners. It replaces location licences with artisanal mining permits.

    According to the bill, artisanal mining permits are a preserve of only Ugandan citizens, cooperative societies, registered associations comprising of exclusively Ugandan citizens or registered companies where 100 percent of shares are held by Ugandans.

    In its current form, the bill only grants powers to local governments to licence and regulate artisanal exploitation of building substances (development minerals) in collaboration with the DGSM. Building substances also known as Low Value Minerals or development minerals include stones (quarrying), sand, clay and murram. These were previously un-regulated under the Mining Act, 2003.

    ROYALTIES

    Asiimwe also expressed concern over the sharing of mineral royalties. According to the Mining Act, 2003, royalties are shared among central government (80 percent), local governments (17 percent) and land owners (3 percent). The bill maintains the formulae for sharing royalties.

    “What criteria were used in determining the formulae? We need an equitable format for sharing of royalties and not the central government taking everything and leaving left-overs to local governments and land owners,” Asiimwe said.

    Participants in the meeting proposed a change in the formulae of sharing royalties. They proposed central government should take 50 percent, district local governments, 40 percent while the 10 percent should go to the land owners.

    Vicent Kedi, the Principal Engineer in charge of mining at the DGSM welcomed proposals from stakeholders, especially mining communities.  “The draft bill is just a working document to direct discussions. Therefore, consultations are meant to come up with a document [law] that is agreeable to all Ugandans,” Kedi said. Recently, government launched national-wide consultations on the bill, before it is tabled in parliament for enactment.

    By; Edward Ssekika, Edited by Muhumuza Didas

  • CSOs want EITI principles to be enacted into a local law

    CSOs’ argument is based on the voluntary nature of EITI principles and therefore there is need for legally binding local framework with sanctions for non-compliance.

    A section of civil society organisations wants Uganda’s government to enact Extractives Industries Transparency Initiative (EITI) principles into a local law.  In an open letter dated August 12, 2019 and addressed to the Minister of Finance, Planning and Economic Development (MoFPED), Hon. Matia Kasaija – in whose docket EITI falls, civil society organisations argue that since EITI principles on transparency and accountability are voluntary, there is need to translate them into a legally binding local law with sanctions for non- compliance.

    “Government has set October 2019 as the month in which the country will formally apply to join the EITI. However, while we appreciate government’s efforts to join EITI, we note with grave concern that events taking place in the country today show that government is not ready to join and make proper use of the EITI,” a letter signed by 15 civil society organisations reads in part.

    In their letter, CSOs argue that there are many cases that show lack of commitment to transparency on part of government including failure to implement relevant laws such as the 2015 Public Finance Management Act (PFMA). Since the enactment of the PFMA in 2015, government has continued to violate its provisions on transparency and accountability with impunity, CSOs claim. The PFMA provides for the collection, management and utilisation of Uganda’s oil revenues in a transparent and accountable manner.

    “In the presence of such abuses, it is clear that unless fundamental reforms in government are undertaken as part of the EITI process, there is little hope, if any, that joining EITI will help address the problems of lack of transparency and accountability for Uganda’s oil revenues,” the letter reads.

    For instance, the Shs 6 billion reward paid to 42 government officials for their participation in the Capital Gains Tax (CGT) negotiations and engagements against Tullow Oil in Landon – popularly known as the ‘Presidential handshake’ is a clear illustration of wasteful expenditures.  In addition, government has since not fully implemented the recommendations from the report on Committee on Commissions, Statutory Authorities and State Enterprise (COSASE) that investigated the reward.

    “Such a government cannot be trusted to comply with EITI principles which are voluntary. An executive that refuses to be held accountable and disrespects parliamentary decisions is unlikely to comply with EITI principles,” CSOs argue in their open letter.

    The letter adds, “This non-compliance with a binding law creates suspicion that government will not respect and comply with the EITI principles which are voluntary,” the letter reads in part.

    “Government should ensure that after joining EITI, an EITI bill is tabled before parliament to enact an EITI law in Uganda. To enable compliance to the EITI law, the law should provide for formation of a multi-stakeholder committee with representatives from government, CSOs, cultural leaders, religious leaders, academics and the private sector. The committee should among other things be the overall overseer of the Petroleum Fund, the Petroleum Investment Fund and should be responsible for the selection of development projects to be funded with oil revenues. The law should provide that the decisions of the committee are binding on government,” the letter reads.

    Ntegyereize Gard Benda, the Chairperson Publish What You Pay (PWYP) Uganda chapter concurs. “The only sanction that the EITI provides is a suspension which may not matter to government. Therefore, it is important that we have domestic safeguards in terms of a law to compliment the voluntary EITI principles,” Benda argues. 

    By: Edward SsekikaEdited by Muhumuza Didas

  • Nampewo Mbowa replaces Mugerwa as Tullow Uganda General Manager

    Tullow Uganda Operations Pty Ltd recently appointed Mariam Nampeera Mbowa, a seasoned lawyer with vast experience in the oil and gas sector, as the company’s General Manager. Nampeera, replaces Jimmy Mugerwa who was recalled to Tullow Oil Plc headquarters in Landon in mid-August 2019, as a director in charge of infrastructure and operations.

    Tullow Uganda Operations Pty – is a subsidiary of the British oil giant Tullow Oil Plc. Tullow Oil is one of the five oil exploration and production companies in Uganda and it holds 33.3 percent interests in Exploration Areas (EA) 1, 1A, 2 and 3A in the Albertine graben.

    It was not clear why Mugerwa was moved from Uganda at the time when the company is in the process of making a Final Investment Decision (FID). Tullow is also embroiled in negotiations with government of Uganda over the payment of Capital Gains Tax (CGT), on the proposed farm-down of part of the company interests to Total E&P Uganda BV and CNOOC Uganda Ltd.  

    His recall could be attributed to the troubled reign as board Chairman of DFCU Bank and his failure to conclude negotiations with government over Capital Gains Tax. In its half year results report of 2019, released in July, Tullow expressed its dissatisfaction with the sluggish nature of negotiations with Government of Uganda that has led to delays in completion of the farm-down. DFCU bank has been embroiled a series of scandals arising out of the controversial take-over of Crane Bank Limited under the stewardship of Mugerwa as the board chair –  something that was in turn tarnishing Tullow’s international image.

    CONTROVERSY OVER CGT

    Mugerwa broke barriers as the first Ugandan to head an oil exploration and production company in Uganda. However, the last two years of his tenure in Uganda, Tullow has been in protracted negotiations with government over the payment of capital gains tax. His recall could be attributed to the company’s frustrations with government of Uganda overall.

    In January 2017, Tullow announced that it had agreed to farm-down (sell) 21.57% of its 33.33% interests in Exploration Areas 1, 1A, 2 and 3A in Uganda to Total E&P Uganda B.V (and CNOOC Uganda limited) for a total consideration of $900 million. However, the farm-down has to be approved by government upon satisfaction that the relevant taxes –  in this case, Capital Gains Tax has been paid.  The tax dispute is over a $ 167 million (approximately Shs 617 billion), a bill Uganda Revenue Authority slapped on Tullow for its sale of $ 900 million worth of assets to Total and CNOOC.

    However, Tullow objected the bill on grounds that given the costs it had incurred, $167 million tax bill was not correct – sparking a stalemate. Though Tullow and Total want a political settlement to a tax dispute, President Museveni has in the last meetings in January and April 2019, insisted that the tax dispute should be settled with URA and not him. This has prolonged the disagreement with no quick end in sight, further complicating the Final Investment Decision (FID) and consequently ‘first oil’ target.

    Once the farm- down is completed, Tullow will remain with only 10 percent interest in the up-stream and mid-stream (mainly pipeline) and with no management role. Mugerwa’s recall to Landon comes at the time when Tullow Oil Plc announced a major discovery in the Orinduik block in Guyana, raising expectations that it could move to develop the oil fields there.

    WHO IS MARAIM NAMPEERA MBOWA?

    Nampeera is no stranger to the oil and gas sector. Prior to her appointment, she has been working as General Counsel – East Africa where she headed Tullow Uganda and Kenya legal teams. She worked as company secretary and legal advisor for Shell Uganda between 1998 and 2003 and she also served Shell International BV in different capacities. She also worked as legal officer for Uganda Petroleum Company Limited (formerly Mobil Oil Uganda) between 1994 and 1998. She holds a Bachelor of Laws degree of Makerere University, Master of Laws from Landon School of Economics and a Diploma in Legal Practice from the Law Development Centre.By: Edward Ssekika,Edited by Muhumuza Didas

  • UNOC appoints Ms Proscovia Nabbanja as Acting CEO

    Nabbanja become the company’s second CEO following the resignation of Dr Josephine Wapakhabulo.

    The Board of Directors of the Uganda National Oil Company Limited (UNOC) appointed Ms Proscovia Nabbanja as the company’s Acting Chief Executive Officer (CEO) following the final departure of Dr. Josephine Wapakhabulo. “Uganda National Oil Company Limited [UNOC] Board of Directors [BoD] unveils the Acting Chief Executive Officer – Ms Proscovia Nabbanja as Dr Josephine Wapakhabulo concludes her journey, August 13,” a tweet from UNOC read announcing the appointment.

    Nabbanja replaced Dr Josephine Wapakhabulo who resigned in May this year citing family and personal reasons. However, her resignation took effect on August 13, 2019. This means that Wapakhabulo officially handed over office to Nabbanja on Tuesday August 13, 2019.

    In a short video posted online by UNOC, Emmanuel Katongole, the Chairman Board of Directors (BoD) praised Dr Josephine Wapakhabulo, the out-going CEO that she has been “a terrific leader”.  

    Ms Nabbanja 41, is a Geologist with 19 years’ experience in the Oil & Gas industry and gas been the Chief Operating Officer – Upstream at UNOC for the last 3 years. Before joining UNOC, Nabbanja worked as a Geologist with the Ministry of Energy and Mineral Development under the Petroleum Exploration and Production Department.

    UNOC is a private company wholly owned by the state and takes care of the state’s commercial interests in the sector. Proscovia has 17 years of experience in oil and gas industry. Formerly served as a Principal Geologist in the Petroleum Exploration & Production Department under the Ministry of Energy and Mineral Development. She headed the Technical Division and was at the forefront of reviews of technical proposals especially field development plans and petroleum reservoir reports.

    She headed the estimation and reporting of the oil resources and reserves in the country, field operations monitoring and management of petroleum data.

    She has sat on a number of inter-ministerial committees and also worked on a number of Donor funded programs such as Norway’s Oil for Development and those supported by the USAID. Proscovia holds a BSc (Chemistry, Geology) – MUK; MSC Petroleum Geoscience – Imperial College of Science Technology and Medicine; Diploma in Petroleum Management and Operations; and Masters of Business Administration – Imperial College Business School.

    by: Edward Ssekika,Edited by Muhumuza Didas

  • EACOP ESIA: Vehicle collisions, fire, oil spills & sabotage top the list of risks

    The Environmental and Social Impact Assessment (ESIA) report for the East African Crude Oil Export Pipeline (EACOP) project, lists accidents from vehicle collisions, fire, in-land oil spills and sabotage among the top risks the project faces. The ESIA report was submitted to the National Environment Management Authority (NEMA) for review and subsequent approval (after stakeholders share their views and input). In July 2019, NEMA invited the public to submit their views on the report either in writing or during public hearings. The report was prepared by Total East Africa Midstream BV – an affiliate of French oil giant, Total SA.

    Other potential impacts from unplanned events include: earthquakes and landslides according to the report. According to the report, vehicle collisions will likely cause injury or mortality to members of the public, workforce, livestock and or physical damage to community assets, structures or even project assets. In order to mitigate the potential impacts, the report proposes the establishment of transport and road safety management plan.  According to the report, the anticipated vehicle collisions, could lead to spillage of transported fuels or chemicals causing contamination of soil and water with toxicity affecting living organisms. It proposes to put in place an emergency preparedness and response plan.

    The crude oil export pipeline is expected to traverse 9 districts of Hoima, Kikuube, Kakumiro, Mubende, Gomba, Sembabule, Lwengo, Kyotera and Rakai. In these districts, the pipeline will traverse 22 sub-counties, 4 town councils, 41 parishes and an estimated total of 172 villages and hamlets. “The main source of livelihood in these areas is agriculture and most settlements are concentrated along national and secondary roads. Settlements often have a central trading place,” the report ESIA report notes. 

    “Religious structures are the most common cultural heritage with a physical local and strong intangible sensitivity, including four churches within 100 metres of the pipeline footprint, and three cemeteries, two of which are within the project footprint and a third within 100 metres,” the report reads in part. It is not clear in the report whether the churches and cemeteries will be relocated.

    In the report, it is proposed that during the construction phase, several measures will be put in place to mitigate and minimize the negative impacts of the project to the host communities. “During the construction phase of the oil pipeline, local community offices will be established at locations along the route to provide stakeholders direct access to community location coordinators, community liaison officers and grievance officers,” the report proposes in one of the mitigation measures.

    It further adds, “The Resettlement Action Plan (RAP) team will continue stakeholder engagement throughout the resettlement process. The grievance mechanism will continue to provide opportunities for stakeholders and potentially affected communities to express grievances about the project activities.”

    The report anticipates conflicts mainly related to land and property valuations. In order to mitigate and minimize such conflicts the report proposes that the EACOP project has and will continue to establish a non-judicial grievance handling mechanism to respond to the stakeholders’ concerns and facilitate resolution of stakeholders’ grievances.  The grievance mechanism will be compliant with the United Nations Guiding Principles on Business and Human Rights effectiveness criteria for project–level grievance mechanism.

    EXPECTED ENVIRONMENTAL IMPACT

    According to the report, the pipeline project will have minimal environmental impact. “Direct operational emissions in Uganda will range from 11 – 18,000 tons of carbon dioxide equivalent per year throughout the 25 year project life,” the report reads. This represents around 0.029 percent of Uganda’s total greenhouse gas emissions in 2030.

    “The contribution of the EACOP to national emissions is therefore low and will not affect Uganda’s ability to meet its emission reduction targets under the United Nations Framework Convention on Climate Change’s Paris Agreement,” the report concludes.

    In terms of cumulative impacts of the pipeline project, the report highlights the expected economic boost due to employment, training and purchasing associated with not only the EACOP project but the Kingfisher and Tilenga projects too.

    The report calls for setting up of several management plans to mitigate and minimize the potential negative impacts of the projects. These include plans for the management of labour, project induced in-migration, community health and safety, soil, biodiversity, pollution prevention, cultural heritage, resettlement action plan, stakeholder engagement and waste management among other management plans. However, none of the plans and or plan structures are annexed to the ESIA report.

    by: Edward Ssekika,Edited by Muhumuza Didas

  • Government embarks on multi-stakeholder consultations on the new mining bill, 2019

    Civil society organisations describe the new Mining and Minerals Bill, 2019 as progressive.

    Government started country-wide consultations on the new Mining and Minerals Bill 2019 that seeks to improve the management of the minerals sub-sector. The Mining and Minerals Bill, 2019 will repeal the Mining Act, 2003. Uganda has a huge mineral potential that once exploited and revenues well managed has potential to spur economic growth and development. However, the weak and obsolete legal and regulatory framework has been blamed for the sluggish development of the sub-sector.

    Launching the stakeholders’ consultations on the bill at Imperial Royale Hotel, the Minister of State for Minerals Development, Hon. Peter Lokeris emphasised the need for stakeholders especially mining communities to provide their views on the bill.

    “Please note, at this stage the bill [Mining and Minerals Bill 2019] is a working document and we look forward to your input to enrich it so that it effectively addresses the challenges in the mineral sub-sector in this country,” Lokeris said.

    Onesmus Mugyenyi, the Deputy Executive Director of Advocates Coalition for Development and Environment (ACODE) welcomed the Mining and Minerals Bill 2019 as a step in the right direction. “Under the Mining Act 2003, if you want to apply for a licence, it was first come, first serve. So, those individuals who had information about the minerals sub-sector, would take that advantage and put in applications. Now, what the new bill is proposing is competitive bidding which is a good step,” Mugyenyi explained.

    He added, “What the new bill is looking at is how does the country formalize and empower the sub-sector so that the citizens can maximize benefits”

    Vincent Kedi, a Mining Engineer at the Directorate of Geological Survey and Mines (DGSM) in the Ministry of Energy and Mineral Development (MEMD), says the bill provides for punitive sanctions for none compliance. “Importantly, the bill provides for very strong fines, penalties and sanctions regime. The current law [Mining Act, 2003] has a maximum fine of about Shs 2 million. But the new bill provides for improvements regarding penalties for violations and none compliance,” Kedi explained.

    He adds that the bill also seeks to regulate substances which were excluded in the definition of minerals in the Constitution. These that are often referred to as development minerals include: sand, clay, marram and stones which when exploited on a commercial basis will be categorised as mining and thus their exploitation regulated by government.  According to the Bill, no person will be authorised to exploit sand, clay, marram and stone on a commercial basis without a licence.

    Speaking at the same event, Simon Peter Kinobe, the President Uganda Law Society (ULS) said the new law should promote local content and preservation of the environment. “As Uganda Law Society we are insisting on the local content element, Ugandans should benefit, the government should benefit and so should the investors. Our environment should be preserved and the best practices emphasized,” Kinobe said.

    Arthur Bainomugisha, the Executive Director of ACODE asked government to aim at creating a law that promotes meaningful investment in the sector. “We must create a law that attracts serious investors that will create good jobs for our people in the mining industry,” he explained. 

    By: Edward SsekikaEdited by Muhumuza Didas

  • Ministry of Energy struggles with low staffing levels

    The ministry has lost 70 percent of its well trained and experienced staff to UNOC, PAU and oil related companies due to better salaries.

    The Ministry of Energy and Mineral Development (MEMD) has suffered a mass exodus of its well trained and experienced staff due to poor pay, Robert Kasande, the Permanent Secretary revealed. Kasande shared that at least 70 percent of the staff have left the ministry to Petroleum Authority of Uganda (PAU), Uganda National Oil Company Ltd (UNOC) and other oil and oil-related companies in the last few years. The low staffing levels, he explained have crippled the ministry’s performance.

    Kasande was recently appearing before the Public Accounts Committee (PAC) of parliament to answer queries raised by the Auditor General in the 2016/2017 Audit report. Kasande told the Committee that the ministry could not absorb the funds due to limited number of staff. He attributed the exodus of staff to poor pay at the ministry compared to better salaries at PAU, UNOC and other government parastatals and oil companies. “This exodus has left the ministry with only 30 percent staffing level,” Kasande told the Committee. 

    Some of the notable staff that have left include; Ernest Rubondo, the executive director, Petroleum Authority of Uganda, Dozith Abeinomugisha, Proscovia Nabbanja, Irene Batebe, Gloria Sebikari and Peninah Aheebwa, Ibrahim Kasita among others. Many more of the ministry staff continue to exit to join the UNOC, PAU and other oil related companies. Many of the companies and parastatals are under the watch of the Energy and Minerals Development Ministry.

    He said the ministry returned Shs 2.9 billion meant for staff salaries to the Consolidated Fund due to staff exodus. Nathan Nandala Mafabi, the Chairperson of the PAC, said the 30 percent staffing level is an indication that the performance of the ministry is also at 30 percent.

    “You know there are people in civil service who are looking for money and these companies want people who have knowledge in that area and that is the reason many of them decided to run to these entities for better pay,” Mafabi said. He asked the ministry officials to table their ministry’s salary structure, and the list of those who have left to the Committee.

    According to the Ministry of Energy and Mineral Development Briefing Paper released in May 2019, under the theme; Uganda’s Mineral and Mining Sub-sector: What can be done to harness its full potential, low staffing levels was highlighted as one of the key challenges facing the ministry.

    “In particular, there are a number of unfilled vacancies in the Directorate of Geological and Mines [DGSM]. About 50 percent of the mineral sub-sector staff structure is filled. Most staff are being shared among the three departments of; Geological Survey, Geothermal Resource, and Mines. This has caused limited effective implementation of activities and in turn delayed execution of works,” the briefing paper reads in part.

    “The Ministry of Energy and Mineral Development in conjunction with the Ministry of Public Service should fast-track filling of the vacant positions in the mineral sub-sector structure as a matter of urgency,” the briefing paper recommends. With poor salaries in the ministries, staffing exodus to government parastatals with better salaries is inevitable overall.

    by: Edward Ssekika,Edited by Muhumuza Didas

  • Oil roads construction: Hoima residents cry foul over damage caused by rock blasting

    At least 400 houses in 10 villages have been destroyed by rock blasting in Kigorobya County, Hoima district. PAPs want compensation for their destroyed property.

    “When government started constructing our road, I was excited. I know, it is going to open up our area. However, this rock blasting has affected us

    negatively. You see, my house has developed cracks due to waves from the blasting. It is like an earthquake. I live in fear that one day it can collapse on us,” 67 years old Alice Birungi told Oil in Uganda. “When the Chinese blast the rocks during the day, sometimes I have nightmares of the blasts at night. The waves are too much,”. She added.

    Alice is one of the over 400 households affected by excessive blasting of a rock in Kyakasato village, Kigorobya Sub-county, Hoima district by CICO Ltd, a Chinese company constructing the Hoima – Biiso – Wanseko road which is one of the critical oil roads.

    In a meeting organised by Global Rights Alert – a civil society organisation, residents complained of the excessive damage rock-blasting has caused to their properties mainly houses. CICO Ltd according to residents, started blasting the rock to get aggregates for constructing the road last year.

    John Mary Amanyire, the LC I Chairman of Kyakasato explains that there are many residents whose houses have been destroyed due to rock blasting and yet they have not been compensated. “The company (CICO Ltd) only compensated households within the 500 metre radius, anyone outside that radius has not been compensated. But people’s houses have been destroyed. They too should be compensated,” he said.

    According to residents, rock blasting has not only affected Kyakasato but 9 other villages including Bukona, Haibale I & II, Ndaragi, Kigorobya II, Kikonkona, Kikwanana, Kabatindure and Hanga.

    On April 23, David Karubanga the area Member of Parliament who is also the Minister of State for Public Service wrote to the Executive Director, Uganda National Roads Authority (UNRA) seeking action for the 400 hundred structures which had been damaged by stone blasting. However, UNRA is yet to respond to the MP and residents’ demand.

    Lydia Tukwasibwe, a UNRA sociologist on the construction of Hoima – Biiso – Wanseko revealed that by compensating people within the 500 metre radius, the contractor was following guidelines issued by NEMA. “According to the policy [guidelines] only those within the 500 metre radius are eligible to be compensated,” She explained. She also added that the matter will be solved by their bosses.

    Kadir Kirungi, the district Chairman of Hoima attributes the problem to unrealistic guidelines by NEMA. “I cannot blame the contractor because the contractor is purely following the guidelines which were issued by National Environment Management Authority (NEMA). I am only wondering how NEMA could issue guidelines without any form of assessment,” he said. Kirungi wants NEMA to review the 500 metres radius policy.

    Only 78 households within the 500 metre radius have been compensated. However, according to a preliminary assessment conducted by the area MP, at least 400 houses including 3 schools and 2 churches have developed cracks due to blasting and should be compensated. 

     “Communities outside the 500 metre radius have also been affected, their houses have cracks and we cannot leave this matter untouched. Developent in terms of the roads should come to make people better and not to supress them,” Kirungi said.

    The affected residents have further petitioned the district council for an intervention. In a letter dated July 22, 2019, Isingoma Nathan Kitwe, the Hoima district speaker wants clarification from CICO Limited. “I have received a petition in my office signed by 270 persons affected by excessive rock blasting by CICO in Kyakasato village, Kigorobya sub-county. This is therefore to invite you to my office for clarity before I present the petition to Council for discussion,” Isingoma Kitwe wrote. He added, “As you are aware that we need roads and we thank government for the all the endeavours to construct good roads for the people. However, human health and safety should be given first priority,” by: Edward Ssekika,Edited by Muhumuza Didas