Earth Finds

Earth Finds

Energy Ministry Should Desist From Licencing Out Ngaji Oil Block

By Edwin Mumbere

On July 8th, 2020, the coalition bringing together Civil Society Organisations (CSOs) and members of Kasese women and youth clean energy clubs held a meeting at the office of Africa Institute for Energy Governance (AFIEGO) in Kasese. 

The objective of the meeting was to discuss the fact that the Minister of Energy and Mineral Development, Hon. Mary Kitutu informed the country that Uganda will launch a second licensing round for oil blocks and with a deadline of  September 30th 2020. 

The coalition of Kasese women and youth clean energy clubs brings together women and youth clubs in addition to CSOs that are promoting environmental conservation in Kasese through enabling community access to clean energy. 

The coalition and its members are opposed to the exploitation of dirty energy such as oil in protected areas as this results in environmental degradation, destroys biodiversity, harms community livelihoods through the loss of jobs in the fishing and tourism sectors and others. 

The coalition and its members, therefore, the campaign against government plans to explore for oil in Lake Edward, a Ramsar site, Queen Elizabeth National Park (QENP), a Human and Biosphere Reserve, and other protected areas in Kasese and the Greater Virunga landscape at large. 

The information that the coalition gathered is that five exploration blocks including some that were leftover from the last competitive licencing round of 2016 will be put up for bidding on September 2020. Ngaji block was one of these blocks. Owing to the community, CSO and international pressure, oil companies feared to bid for the block, and rightly so. 

Ngaji oil block, which covers Lake Edward and QENP, serves economic, social, cultural and aesthetic purposes that no amount of money from oil exploitation can replace. 

Moreover, the government is already destroying other critical ecosystems by allowing polluting oil activities in Murchison Falls National Park (MFNP), giving away forest lands to squatters and investors to develop tax centres among others, allowing sand mining and rice growing in lakes and wetlands such as Lwera and others. 

After degrading our environment, government issues Ugandans with warnings to prepare for famine such as the one that was issued on April 3, 2019. 

This is unacceptable and through this petition, we are calling on the Minister of Energy to desist from putting up Ngaji oil block for bidding. 

We are also calling on Members of Parliament (MPs) from Kasese, Rukungiri, Rubirizi, Kanungu, Ibanda, Mitooma and Kamwenge among others to demand that the Ministry of Energy does not put up the oil block for bidding. We explain why below:

  1. a) Environmental degradation: Between February 27 and March 1, 2019, CSOs, youth and women belonging to our coalition visited the oil region and interacted with oil-affected communities from Hoima, Buliisa, Kikuube, Nwoya and other districts. Our visit was supported by AFIEGO. The communities we visited told us that massive vegetation clearing for oil infrastructure, development of big roads through eco-sensitive areas such as MFNP and increase in human-wildlife conflict characterise oil exploitation activities. The communities decried the destruction of their environment and those from Nwoya told us that when oil exploration started, more elephants started invading and destroying their gardens. Communities, therefore, had ill will towards conservation because animals were destroying their crops. 
  2. b) Rise in charcoal and food trade: In addition, we were informed that construction of oil roads such as the Hoima Kaiso-Tonya road resulted in increased charcoal trade and therefore tree burning. With increased traffic on the roads comes increasing markets for charcoal. As such, the environment is being destroyed as communities engage in the charcoal trade. We were also informed that due to the rising food market because of an increasing population in the oil region, communities were increasingly exerting pressure on eco-sensitive areas as they seek land to grow food for sale. 
  3. c) Poor compensation: We were also informed that communities affected by land acquisitions for an oil refinery, central processing facilities (CPFs), roads and other mega oil infrastructure in Hoima and Buliisa were given low compensation. This did not only result in many community members becoming poorer, it also increases pressure on eco-sensitive areas as poorly compensated communities encroach on protected areas that are not well-policed. 
  4. d) Fears over loss of fishing jobs: The fishing communities that we interacted with were fearful that they would lose their fishing jobs due to oil activities on Lake Albert. They said that the lake provides fish and income to the young and old but because of oil activities, communities feared that they would be stopped from using the lake. 
  5. e) Poorly conducted ESIAs: Communities also informed us that government tells them that it will be able to avoid, minimise or mitigate oil impacts on the environment through conducting and implementing Environmental and Social Impact Assessment (ESIA) studies. However, communities told us that the conduct of ESIA is ignored as happened in the oil refinery project, oil activities such as land acquisitions commence before ESIAs are conducted and that community views are largely ignored in ESIA processes. This compromises conservation efforts. 
  6. f) Oil activities against Paris Climate Change Agreement: The community testimonies convinced us more than ever that Uganda will not exploit oil without experiencing oil impacts such as environmental degradation, loss of jobs which cannot be replaced by the oil sector, poverty, food insecurity, water scarcity, increased disease burden, loss of cultures, increased marginalisation of women, conflicts and others seen in countries such as Nigeria, Ecuador and others. We resolved to petition you, the Minister of Energy, and our MPs to ensure that Lake Edward and QENP are protected from oil activities. 
  7. g) Moreover, oil activities are against Uganda’s Nationally Determined Commitments (NDCs) on climate change and the Paris Climate Change Agreement that seek to lower carbon emissions to reduce global warming. We, however, have the following recommendations;

 (i) We call upon the government, through the Minister of Energy, to desist from putting up Ngaji oil block for licencing on May 8, 2019. Enough is enough! The president and his government have severally told Ugandans that they are pro-environmental conservation. In fact, one of the resolutions that the NRM Central Executive Committee (CEC) came up with a following a meeting at Chobe Safari Lodge in Nwoya district in February 2019 was that NRM would work for “environmental conservation, as part of a fundamental push to roll back and mitigate the effects of climate change.” Exploiting oil is against this resolution. The government should not destroy our environment, contribute to climate change through oil exploitation efforts and then tell us to prepare for famine! 

(ii) Further, MPs from Kasese, Rukungiri, Rubirizi, Kanungu, Mitooma, Ibanda and Kamwenge should demand that the Ministry of Energy does not put up Ngaji oil block for licencing. Oil exploitation should not be allowed in Queen Elizabeth National Park, Lake Edward and other protected areas. 

(iii) In addition, we call upon parliament to ensure that the ongoing amendments to the Land Acquisition Act of 1965 by the Ministry of Lands ensure that compensation challenges are addressed. MPs should make sure that the amended Land Acquisition Act sets stiff penalties for government failure to pay adequate compensation and that the act defines what prompt, fair and adequate compensation is. This will help communities which are suffering because of under-compensation while also reducing the pressure exerted on eco-sensitive areas due to under-compensation. 

(iv) Further, the Ministry of Water and Environment, the National Environment Management Authority (NEMA) and the National Forestry Authority (NFA) among other stakeholders should ensure that the environment is protected amidst oil threats. Ministry of Agriculture and Fisheries should ensure that fisheries and fishing communities’ jobs are protected. 

(v) Government, through the Rural Electrification Agency (REA), should scale up implementation of the ‘Free’ Electricity Connections Policy (ECP) of 2018. The free connections that communities need are not those that involve being connected to the grid yet they cannot afford to pay hydro-electricity bills. Communities need off-grid solar energy. REA should, therefore, connect the 1.9 million households and more to off-grid solutions as is aspired to under the ECP. This policy was launched by the government in Kasese in August 2018 and its implementation should be scaled up to enable communities to get connected to solar. Ministry of Energy should pursue this alternative instead of seeking to exploit oil to ostensibly help Ugandans access modern energy among others. 

(vi) Further, government including the president, Ministry of Energy and Ministry of Water and Environment among other stakeholders must implement commitments made under the Paris Climate Change Agreement and Uganda’s NDCs on climate change. Exploiting Uganda’s oil resources is against the Paris Climate Change Agreement and Uganda’ NDCs whose overall goal is to curb global warming. Citizens and development partners should hold government accountable to implement the Paris Climate Change Agreement and Uganda’s NDCs. 

(vii) Finally, development partners should support Uganda to invest in solar projects and to realise lower electricity tariffs to minimise the environmental impacts that arise because of a lack of access to clean energy. 

Edwin Mumbere is a climate change activist

 

Why Oil Revenue Resources May Not Spur Uganda Into A Middle Income Country

By Patrick Edema

Uganda expects to begin producing oil in 2023, and it is anticipated that the government will earn significant revenues from the inflow of oil funds. If collected and utilized responsibly, generated revenues have the potential to uplift Uganda’s economic growth and development.

However, the government has been accused of misuse and violations of oil revenue laws. For instance, contrary to Section 58 of the Public Finance Management Act 2015, the government withdrew UGX 125 billion in 2017 and UGX 200 billion from the Petroleum Fund before parliamentary approval. The money was used to finance deficits of the 2017/2018 and 2018/2019 budget. It is also clear that the government further withdrew UGX 445 billion to finance deficits of FY 2019/2020.

This was a violation of Section 59(3) of the PFMA of 2015 which provides that oil revenue will only be used for infrastructural and other development purposes only. Further, since 2008, the government has earned over $1 billion from signature bonuses, CGT and other oil revenue sources but the government cannot account for most of this money. This non-compliance with a binding law creates suspicion that the NDP III will not achieve the expected targets for 2021-2025 in Uganda’s transformative vision 2040. 

As Uganda works towards achieving middle-income status, the National Development Plan is capturing every single important statistic that oil and gas will propel Uganda to middle-income status as well as overall achievement of the country’s 2040 vision. But on August 30, 2016, the Ugandan government allotted Tullow Oil Company with five production licenses while Total was given three. This brings the number of production licenses issued to nine after Uganda had offered one to the Chinese National Offshore oil company (CNOOC). And what one is asking is how much money Uganda has earned from the oil sector for the last eight years or so and what that money has been used for. How much of this is kept on which account? The few times the oil-money issue has been discussed is when Uganda won a dispute against Heritage Oil company and another case against Tullow Oil.

The World Bank report (2015) indicates that Uganda’s GDP currently stands at $ 26.37 billion with GDP value representing 0.04 per cent of the world economy. As a country, we predict GDP enhancement when oil production starts. It is unfortunate that NDP III will not register the expected success if there is no transparency and accountability in oil and gas sector to ensure that resource wealth is managed for the benefit of the whole nation.

The government further implements environmental laws such as the Environmental Act 2018, Environmental Impact Assessment (EIA) Regulations  1998 that are required to guide in the Environmental and Social Impact Assessments (ESIA) processes of oil projects. For instance NEMA issued a certificate of approval under violations of the laws NEMA and PAU are violated Regulation 22(2) which requires public hearings to be organised between 30 and 45 days from the last day NEMA receives comments from the public. 

Therefore, disregard of the law by NEMA and PAU harms public confidence in government’s ability to enforce laws in the oil sector to protect the environment, communities and the public.  For example, the Tilenga oil project is being developed in one of the most bio diverse areas in Africa.  River Nile, Lake Albert, Murchison Falls National Park and Budongo in addition to Bugungu and Karuma Game Reserves are key national and transboundary ecosystems that are going to be affected by the Tilenga oil project and the public needs to trust that government will follow the law to protect the environment for the common good. For the NDPIII to achieve its required target of increased household incomes and improved quality of life, government should enforce the environmental laws since the majority of the population depends on agriculture.

With the main goal of the expected Uganda’s National Development Plan (NDP), 2020/2021 -2024/2025 “increase household incomes and improved quality of life” by 2025 through delivering higher economic growth rates, higher GDP per capita and lower poverty rates while reducing vulnerability as well as income disparities between regions and between population segments, there is also need to implement the local content policy if Uganda is to register success of third National Development Plan.

The theory behind local content laws and policies is to encourage the use of local labor, goods and services in the oil and gas industry. But there is a gap between theory and practice. Unfortunately, this gap currently exists in Uganda with poor infrastructure and lack of skills being two of the practical stumbling blocks in building local content, oil and gas companies having to invest time and resources in training local populations and building infrastructure to handle logistical issues.

And notwithstanding the good intentions of the Ugandan Government, the legal and regulatory framework on local content in Uganda is still weak because neither the current nor the proposed regulatory framework on local content provides for clear roles of the various stakeholders in the petroleum industry, timelines for the implementation of local content legislation or policy statements have not been provided, monitoring and evaluation mechanisms to ensure compliance have not been factored in and no definite goals have been set for the achievement of the identified local content objectives.

With the development strategy of the NDP III tailored towards unbalanced growth path entailing focusing on the available limited resources, oil and gas will play a catalytic role of providing the needed resources for increasing productivity in all the sectors through human capital investment, developing complementary infrastructure needed by the private sector, promoting industrial development and manufacturing of value addition.

Therefore, the government has to overcome the challenge of how local content laws and policies work for all stakeholders in the oil and gas industry to promote development of the country as a whole.

Recommendations:

Considering that Oil is a national natural resource, the NDP should cover the following;

In view of Uganda’s present and possible future challenges in the natural resource management specifically oil and gas, civil society organizations would like to propose the following recommendations that must be articulated in the NDP III

Amend the PFMA 2015 to create individual liability: The PFMA should be urgently amended to provide that any government official who violates laws and as a result causes financial loss and or misallocation of public revenues should personally suffer the consequences. This will instill discipline among government officers who act with impunity and later hide behind government offices.

Complete and put in place ESIA regulations: NEMA should urgently complete and put in place the Environmental and Social Impact Assessment (ESIA) regulations and guidelines. Currently, NEMA is implementing the 1998 EIA regulations which do not promote transparency. The new regulations and guidelines should make hiding of information such as the presiding officer’s report a punishable offence.

The NDP III should set standards to decisively deal with and address the broader question of environmental governance, compliance and law enforcement. In Uganda, the majority of people, most especially influential ones, including leaders at all levels spend more time and money either trying to circumvent or violate the law than comply. This implies that it is more expensive to comply and less costly (socially, financially and politically) to violate the law. No matter how technically sound a new development plan is, it is unlikely to change much unless this situation is reversed.

Implement and comply with local content policy. The NDP III should ensure that Ugandans and locally sourced products for employment and use first.

Conclusion

The government is highly applauded for the close attention to the energy sector and the consistent steps taken towards the historical production of first oil by 2023. This is evidenced by heavy investments in the sector for the last few years and still going. However, to strengthen and harness the energy sector, the government should address the above issues both the immediate, medium and long-term so that the energy sector is vibrant and able to trigger the much awaited economic growth and perhaps usher Uganda into lower middle-income status in the nearest future as highlighted in NDP III. It is envisaged that oil revenues will help in financing development projects and facilitate the meeting of NDP III targets and priority sectors identified.   

Patrick Edema is an Environmental Engineer at Africa Institute for Energy Governance (AFIEGO)

 

EACOP To Increase Uganda’s Vulnerability To Climate Change

By Patrick Edema

The discovery of commercial oil deposits was made in 2006 in Uganda and it is anticipated that the government will earn significant revenues from the inflow of oil funds. If collected and utilized responsibly, generated revenues have the potential to uplift Uganda’s economic growth and development.

The EACOP pipeline will be running from the oil fields in Hoima, western Uganda to Tanga port in Tanzania transporting crude that will be electrically heated throughout the pipeline. However, the government of Uganda is ignoring the related climate impacts that will come up with what it thinks is a blessing to the country.

For instance, an understanding of the East Africa Crude Oil Pipeline (EACOP) must begin with the nature of the material the pipeline would transport, a waxy variety of crude oil that solidifies at ambient temperatures and must be heated to at least 50 degrees Celsius throughout the 1443km length of the pipeline to arrive at a port for international export, vastly increasing the environmental and economic costs of exploiting Lake Albert area crude oil reserves. 

An understanding of the East Africa Crude Oil Pipeline must also begin with the fact that world’s temperature has increased by an estimated 0.9o C as atmospheric levels of carbon dioxide (CO2) have risen from 290 parts per million (ppm) in pre-industrial times to more than 415 ppm in 2019, an atmospheric level of CO2 that has not existed since at least three million years ago. 

The Intergovernmental Panel on Climate Change (IPCC) is warning that a further increase of the world’s temperature by more than another 0.6o C, a consequence of CO2 levels exceeding 450 ppm, would have far-ranging catastrophic consequences on humanity, including food security and livability of cities.

Section 8.22 of the EACOP ESIA is titled "Climate" and sub-section 8.22.2 of the ESIA is titled "Project Greenhouse Gas Emissions."  This Section of the ESIA confines its assessment to only the operational emissions of CO2 and reaches the following conclusion (on page 8-370).

The key conclusions related to the EACOP project’s impact on climate include “Direct operational emissions in Uganda once the bulk heaters begin operation will range between 11–18 ktCO2e/a, which represents around 0.014–0.029% of Uganda’s total GHG emissions in 2030: the contribution of EACOP to national emissions is therefore low and will not affect Uganda’s ability to meet its emission reduction target published as part of the UNFCCC’s Paris Agreement.”

The claim that the project’s emissions would be 11–18 kilotons of CO2-equivalents per year ktCO2e/a) is grossly inaccurate as these emissions do not include indirect emissions, which (as stated on page 8-368) are “end use of the products derived from the crude oil.”

As stated in the ESIA, the purpose of the EACOP project is to transport 216,000 barrels per day of crude oil from the Lake Albert area so that the crude oil can be refined into transportation fuels that are used to power internal combustion engines, adding to the global atmospheric burden of CO2 levels.

According to table 8.22-1 of the ESIA states that EACOP crude blend E1 has a fuel density 868 kilograms per cubic meter (kg/m3), resulting in CO2eq emissions of 3.14 kg/kg of fuel.  End-use of the products derived from the crude oil (combustion of transportation fuels derived from EACOP crude blend E1) must be at least this high. 

One barrel of EACOP crude blend E1 has a volume of 0.16 cubic meters (m3) and the purpose of the pipeline is to transport 216000 barrels per day, equivalent to 78.8 million barrels per year, 12.6 million m3 per year, 10,900 million kilograms per year, or 10.9 million metric tons per year. 

If combusting 1 ton of EACOP crude blend E1 results in 3.14 tons of CO2eq emissions, then indirect emissions of the EACOP project would be at least 34.3 million metric tons of CO2eq emissions per year which is 2000 times higher than the operational CO2eq emissions assessed in Section 8.22 of the ESIA

The Interagency Working Group on the Social Cost of Greenhouse Gases (IWG) published estimates of the social cost of CO2 emissions to allow agencies to incorporate the social benefits of reducing CO2 emissions into cost-benefit analyses of regulatory actions. 

In the methods adopted by IWG, the social cost of carbon is defined as the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services due to climate change.

The indirect CO2 emissions of the EACOP project would have immense environmental, social, economic, and moral dimensions.   Approval of the ESIA for the project without scrutiny of the consequences of its indirect CO2 emissions should be set aside as irrational.

Patrick Edema is an Environmental Engineer at African Institute for Energy Governance

 

 

FORECAST: Electromaxx Unstable Power To Cost Museveni, NRM Votes In Arua

By Saad Kiyingi
 
President Yoweri Kaguta Museveni is likely to perform badly in the West Nile region come 2021 polls, pundits have forecasted.
 
Kaguta has been promising during campaign after campaign to solve the problem of repeated power blackouts in West Nile, but the darkness has kept paying endless visits to West Nile all the same.
 
The problem of unstable power has come with dire consequences. Mothers have perished while giving birth so have patients undergoing surgical operations and others on life-saving machines.
 
Businesses have lost equipment which blow up when the power goes off suddenly and then come back just like that.
 
That this problem has slowed down industrialization as well as tourism in the region since the cost of doing business is extremely high in areas with unreliable power, is so critical a point that it requires deeper reflection and quicker resolution.
 
This is why the Speaker of the Parliament of Uganda, Rebecca Alitwala Kadaga who is also one of the key strategists of the ruling NRM party has since stepped out to label the issue of power outages a national scandal.
 
Kadaga made the utterances after listening firsthand to emotional stories of how power blackouts have ruined businesses and wrought untold suffering to the general populace from a group of aggrieved traders and residents of Arua in March this year.
 
The legal mind from the land of Kyabazinga was in Arua to deliver a total of six ambulance vehicles to one of the referral hospitals in the region.
 
Backing the aggrieved traders and residents in West Nile in their quest to access reliable electricity, Kadaga pointed out how the issue has on many occasions in the past been duly presented on to the floor of Parliament.
 
Kadaga then told her audience how she has always done her part by tasking the central government to address this issue, adding that she is also concerned that Kaguta's establishment has failed to power a region of such strategic importance as Arua.
 
When a person of Kadaga's stature, wit,  and political experience calls an issue a national scandal it would be safe to treat it as a vote spoiler. That she didn't call it a vote spoiler does not mean it isn't. 
 
By calling it a national scandal the country's number three in political ascendancy wanted to send a clear to Kaguta being 8: the possible poll tsunami that awaits Kaguta and his party should he hesitate to fix the problem of power there before 2021.
 
But there are hurdles which could complicate Kaguta's longstanding pledge of powering Arua before the next election.
 
A tight deadline tops the list of such hurdles. Uganda is going to the polls in the second month of next year. A quick calculation will show that we are left with barely six months to the polling time.
 
That Kaguta has been promising for years now to deliver reliable power to Arua one cannot guarantee with certainty that he is going to do it barely six months to the polls.
 
Equally worrying is the wanting financial position of the company Museveni signed on to supply thermal power to Arua in a desperate move to salvage his electoral chances in the locality.
 
Electromaxx Uganda Limited is the contractor. It moved two of its generators from its Tororo plant to add 5 megawatts to the Hydropower generated from Nyangak dam. 
 
Electromaxx convinced the President that the combined power would be enough to power West Nile until such a time when Karuma dam would be switched on to join the region to the national grid.
 
But Electromaxx is hard up financially now. It's financial backers are unwilling to release more cash because the company is finding challenges returning the earlier loans.
 
One of the bankers: Absa Uganda has gone a step further by seizing payments from the government to Electromaxx.  
 
Its such a big issue that suppliers of Electromaxx are now refusing to part with stuff. Such stuff includes fuel which Electromaxx needs to run the generators in Arua. 
 
Reliable sources are telling us how Electromaxx owes almost all fuel dealers around money. So they are unwilling to incur more losses through releasing more stuff.
 
It is also true that government owes Electromaxx money complicating further the contractor's wish to do an efficient job.
 
We have spoken to a number of NRM MPs representing constituencies in West Nile in parliament. They are anxious that voters are in Arua are itching to punish them come 2021 over Museveni's failure to solve the power puzzle in that region.
 
" We are really upset. We don't know really why Mzee continues to back Electromaxx even when they are jeopardizing our political standing in West Nile" quip the NRM MPs representing West Nile.
 
Campaign strategists at the NRM party headquarters in Kampala agree with the concerns of the Arua party MPs.
 
" They have a valid point. It is for this problem (of power blackouts) why Kassiano Wadri was able to ride on the euphoria of Bobi Wine to embarrass us and Mzee( read Kaguta) in the Arua municipality by-election which saw Wadri replacing Ibrahim Abiriga," they reason.
 
Kassiano was a joint candidate for the opposition who ended up winning the highly charged by-election in Arua Municipality held to replace Abiriga who had been shot dead even when President Museveni had deployed all resources at his disposal to ensure victory for the ruling NRM party candidate, Nusura Tiperu candidate.
 
To make matters worse members of the Arua West Nile Chamber of Commerce are also furious. They called a press conference recently and vowed to march to State House to ask Kaguta why he is keeping them in darkness.
 
Keep watching this for more revelations.
Subscribe to this RSS feed

Kampala