COMMUNIQUE

AFIEGO AND GPFOG CALL ON PRESIDENTIAL CANDIDATES TO ADDRESS CHALLENGES

IN OIL SECTOR IN THEIR MANIFESTOS FOR NATIONAL DEVELOPEMENT
INTRODUCTION
Yesterday, 9 November 2015, AFIEGO convened a meeting of partners and youth groups
under the Guild Presidents Forum on Oil Governance (GPFOG) a university students
association started in November 2014 with main objective of promoting good governance
in Ugandas oil sector- at its office in Kampala to discuss the expectations the youth and
partners have in the nominated presidential candidates and issues the presidential
candidates should address in their manifestos. In particular, the discussion was centred on
matters pertaining to the oil sector including the matter of ensuring that the oil sector is
governed in a transparent manner which will enable meeting of the needs and aspirations
of Ugandans should any of the candidates assume office in 2016.

This discussion was important because on the 9th of November 2015, all nominated
presidential candidates launched their campaigns in different regions in Uganda. According
to the Constitution of Uganda, all the executive powers are vested in the hands of the
president. As such, whoever assumes the presidency in 2016 will hold power over
Ugandas oil sector.

The discussion was also important because oil production is projected to begin in
2018/2019 which means more oil revenues will start flowing. The sector is expected to
generate over $3 billion per year for the next 30 to 40 years. The sector also has potential
to impact on the social, environmental, economic and political life of Uganda and beyond
and if the negative impact is not mitigated, the discussions participants said, Uganda could
suffer the resource curse.

Participants identified some of the challenges being faced in the oil sector as including
governments insistence on constructing houses for only 46 oil refinery-affected families,
leaving 47 families out, contrary to the Resettlement Action Plan (RAP). The participants
also wondered why government is insistent on amending the Public Finance Management
Act, 2015 which amendment will make it easier to mismanage funds, including oil
revenues; Shs1.6 trillion has already been mishandled because Bank of Uganda
transferred the revenues to the Consolidated Fund though it claims the Act was not enacted
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in a law. Additionally, participants expressed displeasure over governments failure to

issue ALL oil companies with production licenses and governments insistence on building
a refinery without any evidence of economic benefits for Uganda.

Participants in the discussion also expressed strong displeasure at continued abuse of

human rights in oil sector processes abuse of the rights of the refinery-affected people
which include denying their children access to education and denying the families access to
health care, safe water and burial grounds were particularly condemned. Limited public
participation in oil sector processes, lack of absolute transparency and the fact that news of
the planned export pipeline caused fear in the people in the oil region because government
has failed to respect human rights was also condemned.

Additionally, the fact that Uganda cannot generate sufficient power for business and that
the little generated is expensive, the fact that women are still fighting for their fundamental
rights to be respected and the fact that the number of mothers dying as a result of
pregnancy-related complications remains high with some health care workers having to
use torch light to deliver babies were also condemned.
Hunger also remains a challenge in the country. Universal Primary Education (UPE) pupils
continue to get poor education and educated youth cannot get jobs at home; instead our
graduates are being exported as slaves disguised as labourers or are used to carry drugs to
foreign countries and other places where they are being hanged, sexually abused, among
others. All these problems are as a result of poor governance, participants in the discussion
said.

Ugandas oil resource has the potential to solve some of these social and economic
challenges, the participants said. Unfortunately, they may not be addressed because of
mismanagement of the sector, which the concerned people (government) have largely
refused to admit and parliament seems toothless to stop these challenges and injustices.
After discussing the current state of affairs in the sector, the meeting made the following
observations:

Delay in the formulation of the local content policy. The Ministry of Energy and
Mineral Development (MEMD) has delayed in releasing the national/local content
policy yet many youthful Ugandans have obtained training in oil courses abroad
through private sponsorships but most importantly, through the government
sponsorship program. Many continue to acquire qualifications required in oil and
gas operations but without a local content policy and talent register detailing
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Ugandans with oil and gas qualifications, these Ugandans may be overlooked for
expatriates. Uganda Petroleum Institute Kigumba has also graduated about 88
students to work in the oil and gas sector and it has enrolled its third intake but
these graduates are largely unemployed. The situation might remain the same if the
MEMD does not release the local content policy.

Failure to issue production licenses. Government and some oil companies have
failed to agree on certain terms and as a result, government has failed to issue
licenses to oil companies including Tullow Oil and Total E&P so that production can
begin. This has resulted in loss of jobs in the oil and gas sector and Ugandans have
not been spared. Unemployment, which is already alarming, has been exacerbated.

Absence of curriculum policy. Today, there is no proper curriculum development

system or institution charged with deciding the kind of training and courses
Ugandans need in relation to oil and gas operations. Most of the training is based on
individual institutional choice. The system to appraise the institutions of higher
education that wish to start offering oil-training programs is also lacking.

Violation of community rights. Human rights violations have been perpetrated

against communities in the oil region. For example, the refinery development
project on 29 square kilometers land saw over 7,000 families displaced from their
land in Hoima district, Kabaale parish, and Buseruka sub-county and during this
process, human rights violations were and continue to be perpetuated. Currently
over 90 families who applied for relocation have not been resettled yet and for the
last three years, they have endured suffering. The MEMD stopped them from
carrying out any economic activity on the land and as such, their livelihoods have
been hampered for the last three years. They also have no access to clean water,
health services and schools. Increased interaction with wild animals has also put the
peoples lives in jeopardy.

Poverty: Most of the people in the oil project areas are too poor and un-empowered
to negotiate with oil companies for fair compensation rates. To make it worse,
government, oil companies and the rich are taking advantage of the peoples poverty
and are offering them low compensation rates. Project-affected-people in areas
where oil sector operations are taking place are compelled by conditions of need
and poverty to accept unfair compensation even when they are not happy.
Limited access to information: Despite the existence of Article 41 of the 1995
Constitution and the Access to Information Act, 2005, that provide for the right of all
Ugandans to access information in the hands of government, the government has to
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date continued to be secretive in oil development processes including the new

licensing round and in the Production Sharing Agreements (PSAs) which have not
been published to date.

Absence of regulations for the oil laws: The Petroleum (Exploration,

Development and Production) Act 2013, (Upstream law) and Petroleum (Refining,
Conversion, Transmission and Midstream) Storage Act 2013, (Midstream law),
mandate the Minister of Energy and Mineral Development to formulate the
regulations for the Upstream and Midstream laws. However, since the passing of
these oil laws in 2013, the government has failed to put in place final regulations.
Without the oil regulations in place, Uganda risks engaging in poor quality or
corrupt company selection. This could lead to severe social, economic and
environmental consequences. The regulations are therefore not only critical to
guide for instance, the new oil licensing process, but also ensure transparency and
accountability for the benefit of the citizens.
Lack of enforcement of the Public Finance Management Act 2015.This has risen
due to failure by Ministry of Finance Planning and Economic Development (MFPED)
to formulate regulations for the downstream operations. We believe that if the
regulations were in place, they would enable proper management of oil and gas
revenues.
Delays in oil production. While CNOOC has a production license for her 33% of the
confirmed reserves, Total E & P and Tullow Oil which own 66% of the reserves have
failed to reach a consensus with the government and perhaps, this may be the

reason we cannot meet deadlines and commence oil production. And it is also clear
that without a production licenses to all the oil companies that own the reserves, a
Final Investment Decision (DFI) cannot be made to pave way for production.

Remember every unnecessary delay is a missed opportunity. Unemployment will

continue to dog Uganda if the production licenses are not issued.

In view of the above observations, the meeting made the following recommendations and
asked that they are included by the nominated presidential aspirants in their manifestos:

Address the unemployment problem by ensuring that the MEMD puts in place the
local content policy to enable the achievement of objectives 7 and 8 of the National
Oil and Gas Policy (NOGP) 2008, and enforcement of Sections 52-55 of the
Midstream law and sections 124-127 of the Upstream law.
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Ensure there is transparency and accountability in the oil sector. There is a need to
publish all petroleum agreements that government and other players in Ugandas oil
industry have entered into to ensure transparency. To this effect, government
should make contract disclosure mandatory and it should be sanctioned by law.This
will reduce corruption in the sector by those who want to benefit at the expense of
Ugandans.

Ensure formulation of the regulations for the Upstream law by the Minister for
Energy and Mineral Development as required under section 8(d) and section183 of
the Upstream law.
Ensure formulation of regulations for the Midstream law by the Minister for Energy
and Mineral Development to formulate as required under section 4(d) and section
95 of the Midstream law.
Ensure formulation of the regulations for the Downstream law by the Minister of
Finance, Planning and Economic Development in accordance with section 81 of the
Public Finance Management Act, 2015.

Guide the government to build consensus with companies to issue production

licenses and make a Final Investment Decisions to commence oil production to

enable the country expand her revenue base and stop the government from

mortgaging the country through endless borrowing.

Respect the Constitution which gives Ugandans the powers to participate in and
hold the government and all other actors accountable in the management of the oil
sector as a means to shield the sector from the rampant corruption we see in
Uganda today.
Use oil revenues to create employment opportunities for the youth and other
Ugandans.

Thank you.

For God and my country

Signed by:
1. Guild Presidents Forum on Oil Governance (GPFOG)

2. Proposed Oil Refinery Affected Residents Association (PORRA)

3. Africa Institute for Energy Governance (AFIEGO)