The Pros and Cons of Uganda’s Oil Ventures

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Balancing Benefits and Concerns in Uganda's Oil Industry
Balancing Benefits and Concerns in Uganda's Oil Industry
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French oil and gas company TotalEnergies and China National Offshore Oil Corporation (CNOOC) are rapidly progressing in the development of oil and gas projects in Uganda, with an estimated investment exceeding USD 15 billion. We examine the human rights record of the project regarding compensation for affected communities.

Oil and gas infrastructure development in Uganda’s Albertine region has been moving swiftly since February 2022 when CNOOC and TotalEnergies signed the Final Investment Decision (FID).

It is expected that some of the 1.4 billion barrels of oil found in the Rift Valley region, near the Democratic Republic of Congo, will be extracted by the end of 2025.

TotalEnergies EP Uganda, in collaboration with CNOOC Uganda and Uganda National Oil Company (UNOC), plans to invest over USD 10 billion in the development of upstream facilities and the East African Crude Oil Pipeline (EACOP), which will transport oil from Uganda’s Lake Albert oilfields to the port of Tanga in Tanzania and then to global markets.

Some Have Benefited

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The impact of “petrodollars” on a region that has long awaited development is evident to those who have been there before oil and gas projects began. Dirt roads have transformed into paved ones, an international airport nears completion, and new houses have been built in some communities as compensation for Project-Affected Persons (PAPs) in the Districts of Hoima, Buliisa, Kikuube, and Nwoya.

Mugaye Richard, a local resident, acknowledges the positive changes brought by the oil industry: “I think oil has greatly impacted the Buliisa district. Because of oil, we now have good roads. It would have taken us many years to get such roads without the oil project.”

Despite environmental concerns, the government and developers are committed to moving forward. Some residents, like Amina Lubyayi, have already benefited from compensation or new houses and are looking forward to further improvements when oil production begins.

Growing Job Opportunities

The oil industry has created over 12,000 jobs, with 94 percent of these positions filled by Ugandans, according to Betty Namubiru, the Manager of National Content at the Petroleum Authority of Uganda. It is anticipated that job opportunities will increase as construction of facilities reaches its peak.

Compensation Complaints

However, there have been complaints about delays and low compensation rates for PAPs. Fred Lukumu, the District chairperson, expressed concern over the delay in compensating PAPs and low compensation rates for land.

Fred Balikenda, a resident of Kigwera sub-county, has refused to leave his land without what he considers fair compensation, even though his former neighbors accepted compensation and moved to resettlement houses.

Human Rights Watch released a report in July, highlighting “devastating impacts” on the livelihoods of Ugandan families due to the land acquisition process. The report revealed that many affected households were worse off than before, primarily due to compensation delays.

Dickens Kamugisha, a lawyer and Executive Director of the African Institute for Energy Governance (AFEIGO), emphasized the need for fair and adequate compensation for those affected.

TotalEnergies has pledged to provide additional financial compensation at a rate of 15 percent per year to mitigate the impact of delays on PAPs. However, some individuals feel that this compensation is insufficient to make up for the years of lost revenue from their land.

Patrick Jean Pouyann√©, TotalEnergies’ CEO, defended the company’s practices, while Human Rights Watch argued that they were inconsistent with international standards on land acquisition.

Why the Delay in Compensation?

Ernest Rubondo, the Executive Director at the Petroleum Authority of Uganda, explained that the delay in compensation was due to the complex land acquisition and compensation processes in Uganda. Land ownership systems vary, and identifying land and its owners can be challenging.

The Determination of Compensation Rates

Rubondo clarified that compensation rates are determined by the district where the land is located, and disagreements over rates are common. Compensation can be provided in the form of cash or houses, and the process can be lengthy.

Compensations Update

The status of compensation for various projects is as follows:

Tilenga Project by TotalEnergies:

  • Land acquisition process stands at 97 percent.
  • Approximately 5,412 out of 5,523 PAPs fully compensated.
  • 143 resettlement houses handed over, with 15 ready for handover and 77 under construction.

Kingfisher Development Project (KFDA) by CNOOC:

  • Land acquisition concluded at 100%.
  • Approximately 727 Project Affected Persons (PAPs).
  • 65 resettlement houses constructed and handed over.

EACOP Compensation on the Ugandan Side:

  • Compensation stood at 84 percent.
  • Approximately 3,062 out of 3,656 received compensation.
  • 177 resettlement houses handed over to owners.
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