Dimming light on the oil refinery in Kabaale; recounting the devts

Christopher Emanzi, Programme Director, Global Rights Alert

What you need to know:

It is necessary to question the flow and prioritisation of these projects to save taxpayers money...

In 2006, Uganda discovered commercially viable oil and gas deposits in the Albertine Graben and the government embarked on acquiring land for the oil refinery. Strategic Friends International (SFI), a local consultancy firm hired by the government, led this process.

A total of 29 square kilometres of land were acquired in the process, and an estimated 7,118 Project Affected Persons (PAPs) in this area were displaced. The PAPs comprised 1,221 households and this process was a great learning point for government and implementers because it was marred with gross human rights violations. According to the Auditor General’s report covering financial years from FY 2011/12-2016/17, a value of Shs86.78 billion was spent on this process.

The National Oil and Gas Policy for Uganda 2008 recommends refining the discovered oil in-country to supply the national and regional petroleum product demand before considering exportation. The refinery will process an estimated 60,000 barrels per day while the surplus will be exported as crude through the East African Crude Oil Pipeline (EACOP). The refinery will be partly fed with crude oil from the Tilenga Development Area.

The Tilenga Project has since taken shape as contractors were awarded contracts to start work, clearing approximately 2400 acres which partly covers Murchison falls Natural Park and its biodiversity. The Tilenga project will host the Central Processing Facility (CPF) that will be the starting clean up point for the crude oil pipeline before it is transported through the 95km feeder oil pipeline from the Lake Albert basin up the rift valley to Kabaale Industrial Park in Buseruka, Hoima District where the East African Crude Oil Pipeline starts its journey. The Tilenga Development Area is under the care of TotalEnergies. Another CPF will be on the lower side of Lake Albert in what was being named the Kingfisher Development Areas, which also has CPF of its own and a feeder Pipeline to Kabaale Industrial Park.

The two projects’ compensation processes have been cleared. From the Kabaale Industrial Park, the 1,445 kilometre EACOP enroute Tanga bay in Tanzania begins the journey, however, compensation has not yet been done. PAPs still anticipate their accounts will be credited as per the valuation outcomes. They have been in the predicament with so many responses directed to the EACOP restrictions delaying the processes which have since become outdated.

If constructed, the refinery whose capital costs are about $ 4 billion is supposed to process part of crude oil for finished products, and a finished product pipeline will transport them to central Uganda for storage and distribution. Surprisingly, the finished oil product pipeline PAPs have been compensated and paid at a much higher rate of Shs13 million per acre, while the counterparts of the EACOP in the same locality are valued at 3.5 million per acre. Some officials say this is under investigation after the community whistle blew.

As we fast truck the first oil for 2025, The Final Investment Decision was taken on February 1, 2022 which has ushered in numerous projects. Where are our priorities in terms of these projects? What seems clear is that TotalEnergies are not interested in the refinery, that is our own project as a country, and we are supposed to get ourselves a reliable developer for the project. The deal has since been linked to Russia and China, but we cannot tell the direction. In this uncertainty, we ponder whether the refinery project that has already cost us Shs86.78 billion is still a valid project for the country, given that the “money guy” is not interested and he wants to only transport the crude oil. Are we in for another foiled project yet it cost taxpayers a lot of money? Have we lost our bargain for partial production of the crude oil?

Furthermore, where are our priorities, especially when it comes to spending on different projects? Why spend money on the refinery’s Resettlement Action Plan only to give it less priority? The finished product pipeline PAPs have been compensated still ahead of the EACOP affected persons? Do we have a Gantt chart for these projects, clear milestones on what needs to be accomplished ahead of another? The uncoordinated implementation is indicative of planning malfunction which becomes costly in the long run. It is necessary to question the flow and prioritisation of these projects to save taxpayers money, and it is also important to note all these costs are recoverable in the end.

Christopher Emanzi, Programme Director, Global Rights Alert. [The public editor returns next Friday.]