Uganda’s oil refinery project faces compensation disputes

Albertine Region 094

One of the construction sites in the Albertine Region


As Uganda awaits the production of the first drop of its oil resource, a new report says that the country’s Energy and Mineral Development Ministry is facing up to 42 disputes related to the acquisition of land for the establishment of the Oil Refinery in Hoima District.

The disputes stem from a decision by some property owners to reject the low compensation rates. The 42 property owners are part of 670 who are still waiting for compensation from the Ministry of Energy and Mineral Development.

The ministry’s budget framework paper for 2015/2016 says out of 2,615 property owners who opted for cash compensation, 1,945 were paid by the end of December 2014 making about 74.38 percent success.

The document says an additional 364 property owners have been paid during this financial 2014/2015. “Out of the remaining 670 property owners, a total of 42 property owners raised a dispute contesting the rates, however continuous engagements are ongoing to have these disputes resolved”.

It adds that the process of paying the remaining 628 property owners is ongoing and expected to be completed by June 2015. The framework paper says a total of 52.273 billion shillings has been spent in acquiring land for the refinery and identifying a lead investor.

Total land already acquired.

A total of 533.59 acres of land was purchased to relocate and resettle 93 Property Owners that opted for resettlement. As part of the Resettlement Action Plan under the livelihood restoration programme, a follow up visit was conducted to a group of property owners who were compensated. “The visit established that some of the property owners had settled and integrated in the new communities by constructing permanent residential and commercial buildings. And that more follow up visits are to be undertaken”.

The Ugandan government plans to develop a 60,000 barrels per day (bpd) refinery that will later be expanded to 120,000 barrels per day and then 180,000 barrels per day depending on discovery of more resources and market availability.

The document says the strategy is to develop the 60,000 bpd refinery in a modular manner starting with 30,000 barrels of Oil Per Day (bpd) refinery in 2017/2018. The country’s Energy Minister Engineer Irene Muloni says this will mitigate implementation risks and ensure early energy security.


Engineer Irene Muloni


According to the budget Framework paper submitted to the Ministry of Finance, Planning and Economic Development, the process of identifying the lead investor for the refinery has significantly progressed with two preferred bidders selected namely, SK Group – led Consortium from the Republic of South Korea and RT Global Resources – led Consortium from the Federation of Russia.

Parallel initial negotiations with the two preferred bidders were held in August and September 2014; draft key project agreements were reviewed and completed and a Request for Final Offers was issued on October 27, 2014 while the submission deadline was set for early this year on January 19 2015.

Development of petroleum transport system.

The ministry says the draft final report for the National Strategy and Plan for Petroleum Transportation and storage has already been submitted. Evolution for the consultancy services for the Environmental Baseline Survey and detailed routing for the infrastructure corridor from Hoima to Kampala is ongoing.

Also in progress are the evaluations for the consultancy services for the Resettlement Action Plan and its implementation and the feasibility study and preliminary engineering design for integrated export pipeline.

To ease transportation, government is planning to develop an airport in Kabale to ease transportation of equipment and labourers to the refinery site during construction and operation stages.

This, according to the Framework paper, is being done in consultation with Civil Aviation Authority (CAA), the Ministry of Works and Transport (MoWT) and Ministry of Finance, Planning and Economic Development (MoFPED).
The International Civil Aviation Organization (ICAO) in Canada worked with the government to identify a consultant who will develop a Master Plan Study and detailed Engineering Design for the airport. Already Terms of Reference (TOR) for the assignment have been developed and evaluations and negotiations planned.