Development partners have tasked government to equitably distribute across the country proceeds from oil extraction to avoid an ‘oil curse’ seen in most African oil-producing countries.
Speaking on behalf of the Democratic Governance Facility (DGF), an umbrella of eight donor countries last Friday, the Norwegian ambassador to Uganda, Susan Eckey, said whereas oil extraction, if properly managed, “will create jobs, spur innovations and bring investment and infrastructure’’ these must be equitably distributed.
“Experience elsewhere shows that without sound oversight of the extractive sector and fair distribution of the benefits accruing from it, its impact can be potentially negative on livelihoods, community relations and the environment,” Ms Eckey, said.
She was speaking at the launch of the Albertine Graben Oil and Gas Districts Association (AGODA), an association of 10 districts in the oil area that seeks to, among others things, oversee compensation of locals affected by oil extraction and creating other survival alternatives. The association is headed by Mr Patrick Okello, the Nwoya District chairperson.
Ms Eckey also asked the government not to overly rely on oil as the sole solution to the country’s poverty alleviation initiative but learn how to manage expectations since oil, on its own, will not transform Uganda and will not make its entire population rich.
“This must be understood from the start so that the government is allowed to use this once-off windfall wisely to invest in a strong, sustainable and diversified economy that benefits not just this generation but that of your children and your children’s children,” Ms Eckey, said.
Mr Okello, said the association will be used as a lobbying tool to cause fairness, transparency and information sharing between authorities and the local communities.
Uganda is expected to start extracting oil in 2019 and it has been looked at as a game changer for the country’s development financing needs. Recently, Tanzania and Uganda agreed to construct a $4b (Shs13.3 trillion) oil pipeline with the aim of connecting Uganda to the Indian Ocean through Tanga Port for exportation purposes.
By Kamese Geoffrey
The National Association of Professional Environmentalists (NAPE) participated in this year Sixth special session of the African Ministerial Conference on the Environment (AMCEN). The Sixth special session, of the African Ministerial Conference on Environment (AMCEN) was held in Cairo, Egypt, 16 - 19 April 2016 under the theme; "Agenda 2030 and Paris Agreement: From policy to implementation in Africa".
AMCEN discussed three key issues that are very important to the people of Africa in relation to the environment, energy and other development issues of the African people. The meeting among other things discussed;
Also important to note, is the observations that was made that indicates that the plundering of African resources has been going on over a long period of time. This plunder is facilitated by the export from the continent of unprocessed resources.
The PACJA led CSO Meeting:
As part of the CSO engagement of the African Ministerial Conference on Environment (AMCEN), there was a session organized by PACJA in collaboration with UNEP. This meeting was officially opened by a representative of Hon. Dr. Khaled Fahmy the AMCEN Chair/ Minister of environment, Egypt.
It was noted in Cairo that that the 3rd United Nations Environment Assembly (UNEA 3) was going to convene in May 2016 to discuss about climate change, health and environment. The special focus at UNEA 3 was to be on environmental health factors. UNEA is the main governing body of UNEP and plays the following functions:
Some of the Key highlights/outcomes from the meeting;
A committee of 10 people selected by region (North Africa, East Africa, West Africa, Central Africa and Southern Africa) was put in place to continue with the work of influencing the AREI processes and to mobilize other stakeholders on the continent.
By Edward Ssekika
As Uganda moves closer to signing an agreement over the construction of an oil refinery, some of the people who were displaced to make way for the project are still not happy, writes EDWARD SSEKIKA.
After a day’s work, Donald Opar rests under the shade of a mango tree in his compound to shelter from the scotching sun. He stares at his mud-and-wattle grass-thatched house in a pensive mood.
“Where am I going to get money to construct a modern house?” he asks rhetorically after a long pause. The 57-year father of six is a resident of Nyahaira village, in Kabaale, Hoima district. His story is a tale of betrayal at the hands of his own government.
Opar’s family is one of the 93 families in Hoima waiting to be resettled after their land was compulsorily acquired by government to pave way for the construction of the proposed oil refinery. The families that have been waiting for resettlement for the last three years now accuse government of backtracking on its earlier commitment to build all of them modern houses, where they would be relocated.
In 2010, government selected Kabaale parish in Buseruka sub-county, Hoima district to host the proposed oil refinery, a project that has since displaced at least 7,118 people from their land.
Consequently, in 2012, the ministry of Energy and Mineral Development through its contractor – Strategic Friends International (SFI) - conducted a Resettlement Action Plan (RAP), an exercise that valued and documented each project-affected person’s property and preferred mode of payment.
During the RAP exercise, project-affected persons were given two options of compensation – either cash payment or resettlement. Opar explains that Strategic Friends International officials told residents that anyone who would opt for relocation would get an alternative piece of land and a modern house, among others.
The RAP report makes a similar promise. It reads: “...Only 27 affected households [The number has since shot up to 93 households] chose the option of resettlement. The rest preferred cash compensation to resettlement. It is, therefore, recommended that land is identified in the neighbourhood of the refinery project on a case-by-case basis to construct houses and provide land for farming as part of full resettlement package.”
The report further asks government to provide land titles to the resettled people.
“So, I weighed the option of cash payment with its associated risks, and opted for resettlement,” Opar explains.
Since 2012, the 93 families have been waiting for their full resettlement package – an alternative piece of land and a modern house for each household but most of that has been in vain.
Richard Orebi, the chairperson of Resettlement Committee, a local association of the affected families pushing for timely and full resettlement package, says in addition to alternative land and modern houses, government also promised to build for them schools, health centers, extend electricity, safe and clean water and other social amenities.
Yes, government has purchased 553 acres of land in Kyakaboga village, Nyakabingo parish in the same Buseruka sub-county, Hoima district, where the affected families are to be resettled. The land is located approximately 15 kilometers from Kabaale; so, the affected families are going to be resettled within the same refinery area as earlier recommended.
However, not everyone is smiling. Opar explains that in April this year, government officials convened a meeting in Hoima, in which they announced that only 46 out of the 93 families would get houses.
“I am one of those that will not get a house,” he says.
Orebi warns: “As a committee, we still maintain every household should get a house as promised; short of that, we shall not even accept the land. This is betrayal,” he says.
Aggrieved by all this, the 93 families petitioned the president in their letter dated July 9, 2015 to intervene. Government thereafter contracted Samadhura Company Limited to construct at least 46 houses.
But which criteria is government using to allocate houses? Government argues only families whose houses were affected in the refinery land will get houses in the resettlement area.
“We had three modes of compensations: we had cash compensation, land for land and resettlement. Those who had land and houses will also get land and a house; those who had only land are entitled to land only [Land-for-land],” Dozith Abeinomugisha, the assistant commissioner in the petroleum directorate, argues.
But Opar hits back: “I have a house here, but I am on the list of people who will not get a house,” he wonders, pointing at his mud- and-wattle grass-thatched house.
Like Opar, Fausta Tumuheire, a widow of four children, owns a semi-permanent house, but she too is among the families that will not get a house. Winfred Ngabiirwe, the executive director of Global Rights Alert (GRA), a civil society organisation, notes that there are nine households of elderly persons who opted for cash compensation to enable them move with their caretakers and relatives. However, ministry of energy officials categorized them as vulnerable and, therefore, must instead be resettled. They are among the households with land, but will not get houses.
“This worsens their situation since their caretakers have already left and moved to other locations,” she argues.
Government plans to turn Kyakaboga, where the 93 families are to be resettled, into a model modern village city. According to the plan, titled, “Ministry of Energy and Mineral Development: Details of Central Areas for Resettlement Plan for PAPs 2015,” the 533 acres of land in Kyakaboga has been divided into a residential area known as resettlement area and a farmland.
Government wants people to stay in a residential area and then go and do their agriculture in their farmlands. The physical plan shows that in the resettlement area, each of the 93 families will have a plot of land, where they will build a house for those without shelter. The 46 houses will have three bedrooms, with a toilet, kitchen and bathroom outside.
The modern residential area will have a commercial centre for shopping with 11 commercial plots, a police post, two open public spaces, a health centre III, a nursery and a primary school, two churches, water sources, a community centre, and a public cemetery, among others.
However, the project-affected persons have rejected the plan, arguing that it is unsuitable for their rural setting and lives. Innocent Tumwebaze describes the plan of cramming them up into a residential or resettlement village as “turning us into refugees on our land.”
Opar says grass-thatched houses will not be accepted in the residential area because they will defeat the idea of a modern village, yet he doesn’t have money to construct a modern brick house. He says he was compensated seven million shillings for his land, although he has since used all the money.
“If government doesn’t build all of us houses, they should forget a modern village, I will build my grass-thatched house,” he says.
Private participation in large hydropower projects in Africa is increasingly being encouraged through Public Private Partnerships (PPPs). This has been illustrated by the Bujagali Falls Dam, which was commissioned in 2012 in Uganda. Together with the planned Ruzizi III Dam, the project is set to become the continent’s first regional PPP hydropower project.
Large hydropower projects impose enormous financial burdens on African governments; PPPs are seen as a way to ease that burden and distribute risk. International financial institutions (IFIs) such as the World Bank and others consider private participation in hydropower projects to be in line developing new methods of financing. In this regard, the World Bank’s IFC notes that its role in encouraging private participation in energy projects is that of “acting as financial intermediary, providing targeted financial support, convening multiple parties, and accessing a range of financial instruments and models.”
The recent outcome, however, of Africa’s first large hydropower PPP project, the Bujagali Falls Dam, illustrates that private participation does not necessarily reduce the financial, economic, social and environmental costs of large hydropower. In fact, the outcomes seem to be similar to those of purely publicly funded large hydro projects.
A subsequent study of the BOOT and PPA by the Ugandan National Association of Professional Environmentalists, using Prayas Energy Group A Study of Techno-Economic Aspects of the Power Purchase Agreement of the Bujagali Hydroelectric Project in Uganda, came to three major conclusions with significant implications for the future of PPP hydropower projects in Africa.
First, the capital costs of the project were substantially overpriced. The cost of the dam dramatically increased from the initial US$800 million to US$1.3 billion. The PPA, in addition, was found to contained irregular provisions that were not in the best interest of Ugandans. Capacity payments could have been decreased by US$40 million in the first year and an average of US$20 million over the next 29 years, but they weren’t. The study furthermore noted that the World Bank had poorly advised the Ugandan government in negotiating the PPP. Optimum consultation would have led to a net savings of US$200 million.
The shortcomings of Bujagali Dam are also apparent in the mitigation of the project’s socio-environmental impacts. In its previous involvement in Bujagali, AES Nile Power had commissioned a Social and Environmental Impact Assessment (SEIA), together with resettlement and compensation plans. These were approved by both the Ugandan government and the World Bank. AES resettled 35 households, while an additional number of affected households chose to receive monetary compensation instead. These initiatives were nevertheless derailed when AES left the project in 2002.
The new project participant BEL commissioned another SEIA, while its resettlement and compensation action plans were approved by both the Ugandan government and project lenders. But the plans have been criticized as being short-sighted, focusing on the short-term impacts of the hydropower project and ignoring long-term impacts. These perceptions were confirmed when a 2008 compliance review report by the African Development Bank found that project borrowers had not complied with compensation and resettlement policies of the bank and related lenders.
Involuntarily resettled communities now have less access to cash crops and revenue generation activities than before their resettlement. Compensation issues related to individuals injured while working on the hydropower project, as well as those affected by the construction of transmission lines, also await resolution. And the Ugandan government and BEL bizarrely attempted to circumvent the socio-cultural components of the project when an imposter impersonated the spiritual leader of the Basoga people to hurriedly carry out cultural rituals, a prerequisite for commencement of the project.
Furthermore, the dam’s reservoir has submerged the Bujagali Falls, which Ugandans consider to be a national symbol of cultural and spiritual importance. The owners of Bujagali also have yet to account for the hydrological changes which the dam will impose on Lake Victoria. There is currently no mitigation strategy for climate change risks, which could reduce water levels in the lake and negatively impact Bujagali Dam’s ability to generate electricity.
Finally, though the dam was expected to have a total installed capacity of 250 MW, at the time of writing, the maximum generation capacity of the dam has been between 150 to 155 MW. This outcome is significant, given its direct impact on the expected economic efficacy of the dam. Nowhere is this failed promise more apparent than in the resultant increase in electricity prices of 151% from the pre-commissioned dam levels of US$ 13.99 in 2010, to USD cents 21. 2 in 2012.
The change in ownership in Bujagali power dam will not lead to a drop in the cost of power, officials have said.
Last week, Norwegian firm SN Power announced it was buying Sithe Global’s stake in Bujagali hydropower as the latter opts out. But according to Brian Kubeck, the Sithe Global president, “this is just a change in ownership and may not impact on the cost of Bujagali power… Government has where it wants power costs to be, but investors also look at the costs incurred.”
Sithe Global, which has owned interest in Bujagali for eleven years, is incorporated in Mauritius. President Museveni’s biggest complaint has been that Bujagali is too expensive because it is operated by private investors.
At one point, he said government was going to use money from the oil industry to buy them out so as to cut the cost of power. In June last year, he said the country had made a mistake to accept to buy power generated by Bujagali at $10.1 cents per kilowatt hour, which, he added, was partly responsible for high prices of electricity in the country.
SN Power’s entry had been understood as a move by government to reduce the cost of electricity. SN Power says Uganda was a stepping stone to launch in the sub-Saharan region.
“We look to more hydro-power investment opportunities in the sub-Saharan Africa,” said Torger Lien, the SN Power CEO.
SN Power, owned by Statkraft, the Norwegian state-owned power firm, and Norfund, a Norwegian development financial institution, will operate alongside the Aga Khan fund for economic development.
Bujagali was opened in 2012, having cost around $900m. It added 250MW to the grid, halting rampant power blackouts that had plagued the country. Also, it led government to discontinue annual subsidies to thermal power generators.
Uganda expects Karuma and Isimba dams, under construction, to come on board by 2019, bringing a combined capacity of 788MW to the grid. Both dams are being constructed using loans from China. According to government, the power from these dams will be cheaper, costing between $4 cents and $5 cents per kilowatt hour.
Currently, the energy ministry is investigating reports of shoddy works, especially at Karuma, which is likely to delay the completion of the dam. Bujagali was tendered internationally to private companies to build, operate and transfer to government after 30 years.
Karuma and Isimba dams will be owned and managed by the government through Uganda Electricity Generation Company Limited (UEGCL).