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.
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
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
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
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
Government has so far formed a Muti-Stakeholder Group (MSG) – acritical body towards the implementation of EITI.
Uganda has embarked on a journey that could see the country become the newest implementing country for Extractive Industries Transparency Initiative (EITI). For a country,
where the exploitation of oil, gas and minerals is shrouded in secrecy and with accusations of corruption, joining EITI is an important milestone in entrenching transparency, accountability and good governance of the extractive industry.
Cabinet decision in January, 2019 to EITI followed ten years of advocacy mainly by civil society and some government officials. Established in 2003, EITI is a global standard for good governance of oil, gas and mineral resources.
Under the initiative, an implementing country is required to publish an annual EITI report – disclosing information on; contracts, licences, volumes of oil, how much is produced, how much is paid and received, how revenues from the sector is utilised.
To become an EITI implementing country, Uganda has to complete the 5 sign up steps. Step 1 is the establishment of a Multi-Stakeholder Group (MSG) with clear objectives and an agreed work plan for EITI implementation.
With the help of MSG, government will submit the EITI candidature application to the EITI board. Once the board admits Uganda as an EITI candidate, the implementing county publishes the 1st annual report in line with EITI standards within eighteen (18) months. After, the annual EITI reports, an implementing country undertakes a validation process that enables the country become EITI compliant member. Currently, there are 53 countries, implementing EITI out of which, 25 are African.
In February this year, cabinet decision was followed by a public declaration by the Finance Minister, Matia Kasaija of country’s intention to join the EITI. As part of its commitment, Government has already constituted a Multi-Stakeholder Group (MSG) to spearhead the implementation of the initiative.
The MSG is currently comprised of 20 members drawn from Ministries, Departments and Agencies (MDAs), private sector and civil society. However, the membership is expected to rise to twenty-seven members.
The MSG is Chaired by Moses Kaggwa, the director of Economic Affairs at the Ministry of Finance, Planning and Economic Development (MoFPED). Kaggwa’s deputy will be elected from among the members. Other members of the MSG are;
Elly Karuhanga (Chairman, Uganda Chamber of Mines and Petroleum – UCMP).
Allan Kyeyune (Uganda National Oil Company – UNOC)
Kush Amin (Private Public Partnership Unit, Ministry of Finance)
Allen Bucyana (Ministry of Justice and Constitutional Affairs – MoJCA)
Obad Noah (Oranto Petroleum Limited)
Gloria Akatuhurira (Uganda Revenue Authority)
Tom Buringuziza (Armour Energy limited)
Philip Andrew Wabulya (Bank of Uganda)
Nathan Morgan (TOTAL E&P Uganda)
Robert Tugume (Ministry of Energy and Mineral Development)
Jean-Yves Petit (TOTAL E&P Uganda)
Allen Tebugulwa (National Planning Authority)
Godfrey Mucurezi (Uganda Revenue Authority)
Timothy Tibesigwa (Ministry of Works and Transport)
Winfred Ngabiirwe (Global Rights Alert)
Margret Lomonyang (Karamoja Region Indigenous Women Association) Siragi Magara Luyima (Civil Society Budget Advocacy Group – CSBAG)
Onesmas Mugyenyi (ACODE)
Ntegyereize Gard Benda (World Voices Uganda).
MSG has so far convened its inaugural meeting and will be meeting on a quarterly basis. “Standing observer slots will be allocated to the Office of Auditor General (OAG) and the EITI International Secretariat. All observers will be able to engage in discussions at the MSG but will not have a right to vote,” a member of MSG who preferred anonymity told Oil in Uganda. He added that additional seats will be provided for nominated experts to who shall invited to speak on specific issues.
The MSG is currently reviewing its own Terms of Reference (ToRs) and defining their scope.
IS IT A PANCEA?
Once fully implemented, EITI is expected to improved transparency, accountability and good governance of the sector. “EITI increases public information, thereby empowering the public to put to task their government to account for every penny of the resource revenues, which many governments in Africa tend to fear,” argues, Gard Benda, the Country Executive Director, World Voices Uganda. The initiative enhances public debates which improves governance of the extractive industry.
For instance, Tanzania joined EITI in 2008. According to 2017 EITI progress report for Tanzania, reveals that debates on payments of income tax by mining companies operating in the Tanzania, resulted into Acacia company – one of the mining companies paying $ 14 million in unpaid income tax.
But critics argue that EITI is not a panacea for transparent and accountable governance of the extractives industry since it lacks sanctions. Countries that are not compliant can on be delisted from the initiative but can join the initiative again. For stance, countries like; Central African Republic, Democratic Republic of Congo, Tanzania, Sierra Leon, Yemen, Indonesia, Madagascar, Guentamala have been suspended and re-joined the initiative.
With the Multi-Stakeholder Group in place, the next step will be for Uganda to formally apply to the EITI International Board for candidate status.
Government concluded two public hearings of the Environmental and Social Impact Assessment (ESIA) report for the Kingfisher development project. The hearings were conducted at Rwemisanga Primary school in Kikuube district and at Kabaale Primary school in Hoima district. The hearings which were organised by the Petroleum Authority of Uganda brought together project affected persons, diplomats, CNOOC Uganda, the operator for the Kingfisher oil field and other stakeholders who expressed their opinions and suggestions on the project inorder to influence NEMA’s decision making during the review of ESIA report. CNOOC Uganda Ltd intends to establish petroleum production facilities and support infrastructure in Buhuka parish where crude oil from wells drilled under Lake Albert will be processed and transported via a 46-kilometre feeder pipeline to a delivery point in Kabaale parish in Hoima district. While presenting the ESIA report, the CNOOC Uganda Vice President Mr Cu Yujun said the Kingfisher oil project will yield substantial social and economic benefits for Uganda through increased government revenues, employment opportunities, increased household incomes and expenditure. He said the project will increase the demand for goods and services within the project affected areas. He added that the project will cause human capital development through short and medium term employment opportunities for the people and cause a transfer of knowledge and skills from expatriates to Ugandans. The Kingfisher ESIA report indicates that during the construction, operation and decommissioning of the project, air quality, soils, surface and ground water may be affected. The project is expected to attract immigrants, affect the health, social services and livelihoods of affected persons. It is feared that the project could destroy archeological and cultural sites in the area. According to Mr Cu Yujun, all impacts have been identified and measures have been developed to ensure that negative impacts are mitigated and positive impacts enhanced for communities. CNOOC indicated that there are management plans for air quality, noise and vibration, biodiversity, traffic, waste, influx, cultural heritage and community health. Christopher Busobozi, a resident of Kyangwali subcounty asked CNOOC to increase of education and trainings for Ugandans to enable Ugandans attain the necessary skills to work in the oil industry. Omuhereza Tumwesigye from Kabwooya subcounty expressed worry that oil developments may displace some people and affect their livelihoods. He demanded a plan to improve on livelihoods of project affected persons. Simon Kyahurwa, a resident of Buseruka subcounty told a pre-public hearing dialogue that was organized by Action Aid Uganda that some oil producing states like Nigeria have had challenges where oil pipelines are attacked and cut by militants. He asked Government and oil companies for a plan of how oil pipelines will be protected from attacks and spills. Ms Betty Bagadira, a resident of Tonya parish in Buseruka subcounty expressed concerns over women and the elderly being displaced by the project and being marginalized. However, the CNOOC Uganda’s Senior Public relations supervisor Ms Aminah Bukenya said the project will address the concerns which people raised at the public hearings in line with CNOOC’s strategy of win-win for the company and people affected by the oil developments. The Buhaguzi County Member of parliament whose constituency hosts the Kingfisher oil field said locals are worried of increased cases of land grabbing in the area since commercially viable oil deposits were discovered in the constituency. He asked Government to undertake systematic land demarcation and titling to enhance land tenure security of his people. He asked CNOOC to support the planting of indigenous tree species, improve community livelihoods, promote conservation of forests and wetlands and asked Government to take leaders in oil rich areas to oil producing states so that they obtain knowledge and skills about how the petroleum industry operates. The PAU Director of Technical Support Services Ms Peninah Aheebwa who represented the PAU Executive Director said the hearings gave an opportunity to Government and CNOOC to hear public concerns so that negative impacts are mitigated and the benefits of the project are optimized. She said proposals raised by the public will be put into consideration by the relevant Government organs before the project is given a green light to proceed. She said adequate measures will be put in place to address the environmental and social threats of the project. The Public hearings were presided over by Prof Grace Bantebya, a Makerere University lecturer. She said the oil can bring joy and tears to a country. “This gigantic sector can change us either way” she said. She asked stakeholders to lay strategies of making the oil industry a blessing so that the sector helps Uganda in attaining some of the sustainable development goals. Kingfisher is one of the oil projects in Uganda which Government is developing in line with Uganda’s journey to kick start commercial oil production in 2022. Story by Francis Mugerwa Edited by Flavia Nalubega Edited by Didas Muhumuza
Extractives Governance Project Coordinator Didas Muhumuza speaking to the media about youth engagement and involvement in the oil sector at a recently ended Pakasa Forum organised by ActionAid Int. Uganda and other partners.
AAIU to conduct pre-hearing and community engagements to prepare communities to engage government
The Petroleum Authority of Uganda (PAU) will next week(19th-21st June, 2019) hold a Public hearing for the Environmental and Social impact Assessment for Kingfisher oil project among affected communities.
“The public is further notified that there will be two public hearings Wednesday 19th June 2019 at Rwemisanga primary school in Kyangwali subcounty in Kikuube district and Friday 21st June 2019 at Kabaale primary school in Buseruka subcounty in Hoima district from 9am to 5Pm” a public notice released by PAU this morning reads in part.
The public hearings will be held in accordance with the National Environmental regulations 1998.
The hearings bring together the developer and relevant stakeholders to express opinions and offer suggestions on the proposed project to influence the decision making process during the review of the ESIA.
The Kingfisher oil project is located on the south Eastern side of Lake Albert in Buhuka parish, Kyangwali subcounty in Kikuube district.
In 2012, Government awarded an oil production license to CNOOC Uganda Ltd to develop and operate the Kingfisher oil field.
The project will be funded by CNOOC Uganda, Total Exploration and Production Uganda (TEPU), Tullow Uganda Operations Pty Ltd (TUOP) and Uganda National Oil Company which represents Uganda’s business interests in the oil industry.
The project component includes development of four well pads that will hold 20 production oil wells and 11 water injection wells.
The project will have a Central Processing facility (CPF), flowlines to transport well fluids from production wells to the CPF.
The project will also have a 46kilometre-long feeder pipeline to transport crude oil from the CPF at Kingfisher field development area to a delivery point located at Kabaale parish in Hoima district.
The design of the project indicates that the project will have camps to host oil workers, a materials lay down yard, a jetty, and airfield and infield access roads.
PAU is yet to announce the presiding officer of the hearings. However, the first hearings for the Tilenga oil project were presided over by Dr Fred Kabagambe Kaliisa, a former permanent secretary in the Ministry of Energy and Mineral development.
“PAU’s role as a regulator is to ensure that oil and gas activities create value for the country and more so to the host communities. The ESIA process is also meant to ensure that all views of stakeholders are known and addressed. So we welcome feedback” Gloria Sebikari, a manager of corporate affairs and Public relations at PAU told oil in Uganda.
On 14th May, fifteen civil society organisations led by the African Institute for Energy Governance (AFIEGO) wrote to the National Environmental Management Authority (NEMA) expressing reservations about the Kingfisher oil project.
“The undersigned CSOs note with concern that the Kingfisher project area is an area with critical ecosystems including Lake Albert, Bugoma Central Forest Reserve, Kamansinig River, River Nile and others. The project area also has communities that entirely depend on fishing for food, income and other critical aspects. The project must therefore be handled with utmost care and Uganda’s laws must be abided by to avoid or minimize oil impacts on the environment and communities” the petition which was delivered to NEMA on 14th May reads in part.
The Non-Technical Summary (NTS) of the Kingfisher oil project ESIA report states that the mitigations for the social and economic impacts of the land acquisitions under the Kingfisher project and resettlement activities shall be in the Resettlement Action Plans (RAPs). However, CSOs observed that these RAPs are not part of the Kingfisher ESIA report.
If the RAPs are not part of the current ESIA report, it means that the developer presented an incomplete ESIA to NEMA and therefore any comments will be based on incomplete reports, the petition signed off by the AFIEGO Chief Executive officer Dickens Kamugisha.
“This is contrary to the objective that necessitated Uganda’s shift from the Environmental Impact Assessment (EIA) regime to the ESIA regime. Undertaking and reviewing an ESIA requires that one assesses the environmental and social impacts of any proposed project as one component” Kamugisha who is a lawyer, says.
The Kingfisher ESIA report notes that a road will be constructed through Bugoma forest to support the Kingfisher oil project activities. In addition to the roads, a feeder pipeline for the Kingfisher project, the East African Crude Oil Pipeline (EACOP), an airfield in Buhuka and other infrastructure are being planned.
“These developments will open up the forest in particular and the oil region at large to an influx of people who will migrate to the oil region in search of jobs and other oil related opportunities. This will negatively impact on local community livelihoods and will result in degradation of Bugoma forest. Consequently, there will be a reduction in income from tourism and the role Bugoma forest plays in the provision of water to the entire catchment will be compromised” the CSOs stated.
The CSOs asked the developers of the Kingfisher oil project to present detailed plan with a budget, work plan and timelines to show how the Bugoma central forest reserve will be protected from the direct and indirect dangers of oil exploitation.
The ESIA report indicates that millions of cubic metres of water will be extracted from Lake Albert for oil activities.
“However, there is no framework for addressing conflicts over the utilisation of the Lake Albert waters and other resources such as fish by DRC and Uganda. The two countries continue to conflict over the boundaries of the lake. With the proposed extraction of huge amounts of water from Lake Albert by the Kingfisher oil project, it is not clear how the DRC will react to the decision considering that Uganda and DRC have in the recent past been conflicting over Lake Albert to the extent that since discovery of oil in 2006, some people including a Heritage Oil company Engineer have been killed on the lake due to conflicts” the petition said.
ActionAid to conduct pre-hearings
ActionAid International Uganda will hold sub pre-community engagement sessions to enable better preparation for meaningful participation and involvement of community members in the public hearings and other subsequent processes.
These shall be held in Hoima, Buseruka, Kikuube and Kyangwali districts starting 18th to 20th June 2019.
According to AAU’s Extractives Project Coordinator Didas Muhumuza, AAIU has carried out such engagements before in Buliisa that created real time debate, a move that PAU, NEMA and the oil companies appreciated and equally engaged to ensure that communities are satisfied with possible benefit from the sector.
Oil in Uganda correspondent in Bunyoro
The Africa Mining Vision (AMV) is a policy framework established by the African Union in 2009 to promote equitable, broad-based development through prudent exploitation and utilization of the continent’s natural wealth.
The ambitious goal of the AMV is “to foster transparent, equitable and optimal exploitation of Africa’s mineral resources to underpin broad based sustainable growth and socio-economic development.”
The AMV is labeled ambitious as it calls for the creation of ‘a regime of responsibility for natural resource extraction in African countries.” This means it addresses key areas of interest that have long cast a spotlight on the exploitative nature of conducting business between multi-national companies and governments where the former are associated with hemorrhaging of the continent’s resources through tax evasion coupled with illicit financial flows from the mineral sector and the later mortgaging their countries’ resources in unfair selfish contracts shrouded in non-disclosure agreements.
This cocktail of issues often leaves the countries’ citizens wallowing in poverty as the mineral resource wealth does not translate into opportunities and social economic development.
The AMV is described as a game changer in the continent’s mineral sector, according to Oxfarm, in their 2017 briefing paper, From Aspiration to Reality: Unpacking the AMV, as it “comprehensively addresses the challenges associated with harnessing Africa’s mineral resources for sustainable development, while striving to reflect global norms for the equitable governance of the natural resources sectors.”
Ideally the AMV addresses six major areas of intervention namely; improving the quality of geological data which leads to fairer deals and more equitable returns on mineral sector investments; contract negotiation capacity; resource governance; management of mineral wealth; addressing infrastructure constraints; and elevating artisanal and small scale mining by acknowledging its developmental role thereby harnessing this potential through formalization and integration into local and regional economic development.
AU member states are required to adopt the AMV fully, align national mineral sector policies with the provisions of the framework and implement it through derivative policy instruments including the Country Mining Vision, African Mineral Governance Framework and Compact with the Private Sector – while maintaining an integrated, strategic vision for national development.
Experts however say the slow pace of implementation of the AMV since its inception risks failing its major aspirations. The Brief cites that there is low awareness of the potential opportunities for the AMV to address grievances in communities experiencing the negative environmental and social effects of mineral extraction.
Notably, civil society, which has been at the forefront of struggles to put Africa’s mineral sector at the heart of strategies for inclusive, equitable development is making baby steps towards mobilising to engage with the national implementation of the AMV in terms of grassroots mobilization and policy advocacy in Uganda.
In promoting strategies for inclusive, equitable development civil society has been urged to popularize the AMV’s goals of: recognizing the contribution of artisanal and small-scale mining (ASM) to local economic development, and promoting women’s rights and gender justice; advocating for a progressive fiscal regime to curb the hemorrhaging of the continent’s resources through tax evasion and avoidance plus illicit financial flows from the mineral sector thereby promoting transparency in the management of mineral resource revenues and the accountability of states and corporate actors in their relations with mining-affected communities and citizens; upholding the principle of free, prior and informed consent (FPIC) for mining-affected communities; and addressing the social and environmental impacts of mining.
As with a number of non-governmental organisations across, ActionAid International Uganda runs a specific project on Extractives Governance and works with several stakeholders in the sub sector, particularly artisanal and small-scale miners (and government) to uphold and promote the AMV.
Chris Musiime who works with African Centre for Mineral Policy says that there is a lack of a sense of ownership of the AMV concept by Ugandan NGOs and non-alignment with oil and gas which they consider a hot topic at the moment.
“Although the AMV can be perceived as universal in terms of resource management, it remains hugely biased towards mining. At the time it came about, mining was not a big deal here and almost all NGOs were concentrating on oil and gas. Thus it was not an easy fit into the NGO work at the time. If you recall, many NGOs including ActionAid were mad about EITI but never mentioned AMV yet EITI principles are generally represented in the AMV,” he said.
He contends that Civil society needs to familiarise themselves with the AMV first of all, how it came about, why Uganda signed up, and the particular role set aside in the AMV for civil society then pick out what applies to Uganda and set on developing a country specific document for Uganda.
“With the new Minerals Policy, Petroleum Laws and on-going review of the Mining and Minerals Act as well as Uganda accepting to join EITI, CSOs have to remain updated with all these processes if they are to remain relevant. Secondly, they should follow up with the Government Department responsible for the domestication of AMV, am not sure if it’s MOFA or MEMD or both. Gain networks there and understand the challenges they have and see how to help them. AMV domestication cannot be done by NGOs alone. It has to be a partnership.”
Didas Muhumuza, the Manager Extractives Governance Project at ActionAid International Uganda says the project has already embarked on some work around the AMV. He views that the AMV is a top-bottom high level initiative whose formulation and development did not include comprehensive stakeholder consultations and engagement. “It thus requires practical domestication through local involvement and participation by stakeholders in the derivation of the framework. The only opportunity available now is to ensure that the derivation of the Country Mining Vision for Uganda is done through a bottom-up process to enable realistic consideration of the local stakeholders concerns,” Muhumuza emphasized.
There are takeaway points for the civil society to do more about actualizing the AMV as outlined in the brief by Oxfam.
‘Civil society should proactively engage in policy advocacy, research and analysis of the AMV, focus on civic space and social participation, women’s rights and gender justice and environmental plus social sustainability, in order to elicit policy reforms by African governments and the Pan-African policy institutions to address the shortcomings in the framework,” it says.
It also urges stakeholders (especially Civil Society actors to undertake popular campaigns to raise awareness of the AMV and its benefits to African citizens and mining-affected communities, to ensure that the interests of non-state actors are addressed in the Country Mining Visions.
By Robert Mwesigye
Edited by Flavia Nalubega
Edited by Didas Muhumuza
A landmark event in the mining sector of Uganda as the country positions extractives industries as the engine for social and economic development saw the launch of the biometric registration of artisanal miners’ project on 29th March 2019. The project is geared towards formalizing and regulating the activities of ASMs in the country to realise and actualize their developmental role in the sector as Uganda works towards achieving her development agenda as enshrined in the Vision 2040. Speaking at the launch, Hon. Peter Lokeris, State Minister for Minerals Development noted that government recognizes the development role of the ASM sub-sector, which must be well organized to realize its full potential. Engineer Vincent Kedi, the Acting Commissioner for Geological Survey and Mines, hailed the different Civil Society Organizations that are working with the sector to make it better. He hailed ActionAid Uganda for coming on board to work with government to harness the potential of the sector through supporting vital efforts like today’s event and those aimed at organizing ASMs in Uganda. Mr. Don Biniyina, Executive Director of Africa Centre for Energy and Mineral Policy, which was contracted by government to implement BRASM, noted that the event was a special one for artisanal and small-scale miners as it has come as a result of protracted negotiations with government through the ministry to formalize ASMs that have for long been referred to as illegal. He noted that it also marks an important day for ACEMP as the implementers of the project. Mr. Didas Muhumuza, the Coordinator for Extractives Governance work at Action Aid Uganda, that supported the launch of the event but also mobilized ASMs from different regions to attend, reiterated that just as AAU’s mission is to support marginalized communities to fight social injustices, the organization is committed to continually support the artisanal and small-scale miners in their struggles and work together with government to harness the potential of the ASM sub-sector. He also pointed out that AAU champions the domestication of the African Mining Vision (AMV), which was assented to by Heads of States and Governments under the African Union in 2009. The AMV provides for among other key aspects the formalization of ASMs and protection of their rights and livelihoods. The launch of BRASM by MEMD was supported by ACEMP (as the implementer of the project) in partnership with ActionAid International Uganda(AAIU).
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