Monday July 14 2014

Oil refinery: Government should compensate affected people timely

By Winfred Ngabiirwe

If all goes well, Uganda will, in four years, begin to produce its oil. Present reserves are estimated at 3.5 billion barrels. Revenue estimates indicate that at peak production of 200,000 barrels a day, expected anywhere from 2025 to 2035, the country may collect up to $3.3 billion annually.

By the end of 2012, total cumulative investments in the sector had reached $1.8 billion, which was expected to increase to $2.5 billion by the end of 2013, according to the National Budget Framework Paper 2014/15. The government is keen on ensuring everything goes according to plan. Before the year ends, it will have announced the successful lead investor/operator for its refinery whose capacity is 60,000 barrels per day.

It has already nominated officials to head the National Oil Company and the National Petroleum Authority – two key institutions in the exploration, development and production of petroleum in Uganda. These are commendable efforts but more focus on people is needed. A national budget should be one of the areas to look at to ascertain our expectations in that regard, especially in respect to compensation and resettlement of those the sector will directly affect.

In her budget presentation, Finance minister Maria Kiwanuka restricted discussion of the oil and gas sector to three out of the 154 paragraphs of the 10,678-word text. Key in her remarks, government has to date compensated half of the 7,118 people it is displacing for the oil refinery, the selection of its lead investor is nearly complete, and construction is slated to begin next year upon completion of the engineering designs.

The refinery will be built on about 29 square kilometres of land in Kabaale Parish, Buseruka Sub-county in Hoima District. What Ms Kiwanuka did not tell the country is whether the 2014/2015 budget had prioritised compensation and resettlement of remaining people the refinery will affect - technically labelled Project Affected Persons (PAPs).

If, indeed, the government is serious about starting construction of the refinery next year, this should have been priority. Development of the oil and gas sector ought to be of benefit to Ugandans, none more so than those who are directly suffering the inconvenience of displacement for the refinery.

The remaining PAPs in the refinery area are going through hell, according to research Global Rights Alert and multiple other organisations have done. There are those who have been waiting in vain for compensation for the last two years from the time the Ministry of Energy and Mineral Development (MEMD) stopped them from using and/or developing their land. Their neighbours who opted for pay-outs received some of their money and left the villages. It is unclear when their outstanding arrears will be paid.

Among the affected persons are also those who opted for resettlement. There is no evidence to show that the government has already secured the land on which to resettle people as it promised. It has not issued tenders for construction of houses, schools or churches that should be in the resettlement village. Yet MEMD expects to complete the process of compensation and resettlement by September 2014.
This deadline, like the two ones before it, is unlikely to be met. The the National Budget Framework Paper says Shs35 billion is required to pay out the remaining people. It does not say where this money will come from. Already, there is another Shs32 billion needed to fund other priority outputs in the sector that is not in the ministry’s spending plans.

So, for how long will the affected people to wait? The government does not need to be reminded that the compensation and resettlement exercise should be fair, timely and adequate as provided for in our Constitution!

Ms Ngabiirwe is the Executive Director, Global Rights Alert.