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SWFF Annual Report

SWFF Annual Report

USAID and the Government of Sweden launched the Securing Water for Food (SWFF) grand challenge for development in September 2013 during the World Water Week in Stockholm. Within two years after the launch, the Kingdom of the Netherlands and the Republic of South Africa joined the party of Founding Partners. Through SWFF, the partners have worked to identify and accelerate science and technology innovations and market-driven approaches that improve water sustainability to boost food security and ultimately alleviate poverty.

SWFF aims to increase access to innovations that help farmers produce more food with less water, enhance water storage, and improve the use of saline water and soils to produce food. Water Governance Institute (WGI) responded to SWFF call for proposals in 2015 and was selected as a winner from among 408 applications, representing 67 countries.

Twelve winners of the award were selected from the applications. WGI's winning proposal was titled "Promoting Commercial Aquaponics Farming Among Smallholder Farmers/Households for Water Efficiency, Food Security and Livelihoods Improvement in Uganda". The project will initially be implemented in 4 districts of Uganda; namely Kampala, Kamuli, Hoima and Adjumani that were selected based on their high poverty indices.

Kampala was selected because it is the central administrative center of the country; has wide gap between the rich and poor; and suffers from escalation of population as a result of rural-to-urban migration which is challenging the adequate delivery of social goods and services

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Henry Bazira (Executive Director WGI) argues that this explains the systematic weakening of other public institutions to an extent that they cannot independently make critical decisions without the involvement of the President’s Office. Below is his Full Opinion

 

In June 2014, the President Yoweri Museveni during Hero’s day celebrations declared a plan to scrap National Agriculture Advisory Services (NAADS) coordinators and deploy army officers instead citing rampant corruption among the coordinators.

This was later confirmed by the UPDF spokesperson Lt Col. Paddy Ankunda who said UPDF was ready to take over NAADS public service. Since then, the UPDF took over NAADS operations.

In 2015, the President again citing corruption suspended operations of Beach Management Units (BMUs), which are legally enshrined in the local government Act.

Last week, the New Vision Newspaper published an article titled “UPDF takes over fisheries.” This apparent takeover of public services by the UPDF is not restricted to the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) and is not a new development.

It is a protracted process that the regime of President Museveni has worked on for a very long time, albeit silently. Statements like “I am not your servant” by the President are not helping the situation.

Military Takeovers of Public Service

It is not uncommon to find military officers or at least ones that served or serve in the army deployed in many government Ministries, Departments and Agencies (MDAs).

I have colleagues that served or could still be serving in the army that are deployed in regular public service jobs in several MDAs. While this seems well-intentioned to fight corruption and promote discipline, transparency, openness and patriotism as is purported, it is a systematic militarization of public service and a capture of public resources.

This explains the systematic weakening of other public institutions to an extent that they cannot independently make critical decisions without the involvement of the President’s Office.

It is also a violation of the Constitution and the UPDF Act. It risks making a “national army” political and partisan, thus undermining peoples’ confidence in the army.

A Political Economy Analysis (PEA) study I was involved in 2015 in Hoima revealed that instead of the BMUs, there was an outfit called the “Fisheries Monitoring and Enforcement Unit FMEU” comprising of UPDF soldiers, established by the Minister of MAAIF ostensibly because of corruption in the BMUs.

While the FMEU was fully operational then, we did not find any legal backing that justified its existence. FMEU was reported of confiscating fish in the guise that it is illegal and then turnaround and sell the same fish on the local market, becoming part of the problem they were intended to solve.

According to the locals, “it is a syndicate well-orchestrated by highly placed politicians, senior government officials and the untouchables” aimed at amassing wealth, defrauding local fishermen and simultaneously strengthening patronage networks.

Now MAAIF officials are grappling with amending the archaic 1960s fisheries Act to find a way of integrating the army into fisheries activities.

These politically motivated processes have often emerged guised in “the need to improve natural resources management”. However, amidst all military take-overs, the question Ugandans need to ask is whether these take-overs have led to improved service delivery and economic growth or worsened the situation, resulting in widening inequalities and increased poverty?

Deployment of soldiers to manage fisheries on shared lakes, namely Edward, Albert and Victoria could be construed as a posturing for war with neighboring countries and could trigger trans-boundary conflicts when the army clashes with fishermen from across the borders. This is made worse by the highly porous and weak immigration controls at borders in Lakes.

Thus far, there is no emergency or security threat to justify a military takeover of public institutions; Government should respect the separation of roles and duties in the constitution.

The author is the Executive Director of Water Governance Institute (WGI) - More pub

WGI is a member of the Uganda Tax Justice Alliance where it serves as a member of the Steering Committee of the Alliance. The alliance works to promote socially- just, accountable and progressive taxation systems in Uganda.

This is the reason why WGI is part the CSO’s that issued the Accelerated Agenda for Addressing Illicit Financial Flows in Africa .For more information 

 

Click here to view this press release online.

 

 

 

More than two-thirds of £25.4 million spent on a foreign aid scheme to install wells, water pumps and irrigation in some of Africa's poorest areas has been soaked up by fat cat consultants.

Internal documents passed to The Mail on Sunday reveal consultants pocketed at least £16.8 million as taxpayers funded thousands of days of work by private contracting firms. 

Department for International Development (DFID) sources confirm average daily rates for staff on the project were more than £600 – equivalent to a £150,000 salary.

Yet a Government review says the scheme improved resilience to extreme weather for just 370 households in poverty-stricken southern Africa, rather than the 15,000 intended.

The leaked papers reveal only a fraction of the money went on building a handful of small infrastructure and irrigation schemes in rural regions.

Meanwhile the Climate Resilient Infrastructure Development Facility (CRIDF) hired 550 staff, spent up to £217 per person on workshops and £20,446 on 'gender and social inclusion guidelines'. 

The documents admit 'consulting fees are the major cost driver' and 'may be high' – while a DFID analysis found 'purported' economy measures were 'spurious'.

A scheme to help three Zimbabwean villages grow beans and cabbages cost more than £10,000 per household.

Yet despite the scheme frittering away huge sums, DFID increased spending on it by almost £5 million – and invited bids for a multi-million-pound, three-year second phase.

'This is an absolute scandal,' said Tory MP Nigel Evans, who sits on the Commons International Development Committee. 'I feel so angry that money meant to help some of the poorest in the world is lining the pockets of rich people.'

He called for International Development Secretary Priti Patel to urgently review this latest example of profligacy and profiteering in the poverty industry. 'It's an appalling waste of money and clearly should be stopped.'

The CRIDF contract was won by the country's largest specialist aid consultancy, Adam Smith International (ASI), which has seen profits soar as Britain boosted spending on aid abroad to £12 billion.

The firm is already at the centre of two major Westminster inquiries after The Mail on Sunday exposed how it had obtained secret Government papers to gain commercial advantage – then sought to dupe MPs investigating profiteering by fat cat firms.

Four years ago Dfid agreed to spend £20.7 million on CRIDF for small dams, pumping stations and irrigation schemes in order to develop resilience against climate change while showing the value of co-operation between nations. 

But a quarterly review in November 2014 revealed 70 per cent of the first £7.8 million spent went on consultants. Many were at higher rates, which can reach up to £950 a day.

The document accepted 'fees may be high' and were 'the major cost driver' with 550 people hired.

Other spending included workshops in nations such as Mozambique and Namibia with daily costs of £124 to £217 per person; drawing up 'gender and social inclusion guidelines'; and £7,350 on a communications adviser.

An annual report prepared six months later admitted overspending. It said the shortfall would probably be met by 'reallocating some funds' from capital funds, which had been due to be spent on irrigation projects in poverty-struck rural regions.

The document urged DFID to commit more cash, despite more than two-thirds of the forecast budget going on consultancy fees. Incredibly, DFID signed a deal with ASI two months later, giving an extra £4.7 million.

Although praising itself for 'innovative new thinking' in many activities, CRIDF admitted spending £1.2 million on transport alone – while at that stage it had helped just 50 of the 15,000 households targeted over the project.

It had not irrigated a single hectare of land – nor helped any of the 50,000 households targeted for better water security or the 275,000 intended to benefit from 'improved resilience to extreme weather'.

CRIDF had expected to mobilise an extra £10 million by that point from other public bodies. But despite 7,676 days worked by its swollen army of consultants, it raised only £122,000 – and nothing from private firms.

The organisation was committed to only seven capital projects at that stage, costing a total of £2,248,000.

These included Kufandada, a £473,000 project for a weir, pump repairs and small reservoir in south-eastern Zimbabwe, intended to help 120 households. Among other schemes were pump restoration plans in Tanzania and improved sanitation, including communal toilets, for 1,126 households in Zambia.

'This is unforgivable,' said one aid expert who studied the documents.

'They are building a few small things and spending millions on themselves. Clearly the fee rates were too high and management mechanisms totally inappropriate.'

The first two DFID reviews of CRIDF were carried out by Raja Dasgupta, who last year joined ASI, then illegally obtained confidential Government documents to gain commercial advantage. He no longer works for the firm after this newspaper's disclosure of dirty tricks, which prompted Miss Patel to start an inquiry into aid contractors.

ASI insisted he had been barred from working on CRIDF. "They are now under the spotlight for everything "

The most recent public Government review, seven months ago, found costs of the water projects – now ten schemes – had soared to £8.63 million with £3.77 million spent on preparatory work. Kufandada was listed as costing £1,223,708 – an astonishing £10,197 on each of the 120 rural households benefiting. The report admitted CRIDF was behind on projects and failing to hit targets, with just 370 households having improved resilience – 'well below' the 15,000 intended.

But this was blamed on 'a timing issue' and the project was given an 'A' rating. ASI's DFID contracts made millions for its directors as profits soared. More than 80 per cent of its £111.7 million annual turnover is from Government contracts.

One senior DFID source said: 'They are now under the spotlight for everything they are doing with us.'

ASI said CRIDF had mobilised an additional £126.6 million funding and was implementing 16 projects for £4.8 million capital spending, with the scheme on track to hit targets.

A spokesman said Kufandada was preparatory work for a £72.5 million programme to benefit 1.5 million people – and the average cost of CRIDF workshops was £28 per participant. They added: 'CRIDF has already leveraged £5 for every £1 spent by DFID, demonstrating value for money.'

Partners in the project include WYG, a Leeds-based consultancy involved in 15 DFID projects in the past four years. The firm handed chief executive Paul Hamer a £471,000 pay package last year after revenues rose to £133.5 million – although it paid just £321,000 in tax due to historical losses.

The firm said DFID contracts were a tiny fraction of its revenues.

DFID said millions across southern Africa were suffering because of drought and 'many more would suffer in the years to come' were it not for this project. Read more: 

This story would be compelling if only it were a unique case. But it isn’t. It is synonymous with all things that have gone wrong with foreign aid funded government projects in Uganda. Millions of dollars meant for development projects continue to be siphoned benefiting a few individuals in the country. The essence of all of them is ensuring Ugandans remain poor, at times worse off rather than the promise of bettering their worlds /eradicating poverty.

Projects such as the  big hydro-power dams  favored by government of Uganda continue to receive funding  and huge allocations from the national budget every year even when they have clearly failed to deliver on expected benefits. Construction of dams has had a history of inflated costs, lack of transparency in deal making, profiteering ,shady contracts and unnecessary delays. Built on the promises of remaking people from peasants to modern citizens ,these have  failed to  deliver reliable and affordable power even to the local communities near the projects. They have rather become mere set-pieces of nation building.

Indeed,Kiira dam currently produces 50MW instead of the planned 200MW. Information about the actual production of the 250MW Bujagali dam is still unclear and has never been independently verified yet it’s unit cost is still the most expensive in the whole world of power projects. Isimbwa 185 MW and Karuma 600MW dams are now in the offing but their benefit to the country is uncertain, considering this trend.Already, concerns are mounting about the costs of these projects. While Karuma was initially expected to cost around $1.4 billion, this is now likely to shoot up to $2 billion.The reality is that many Ugandans are without access to power and those with access, it is pricey considering that more than half the population lives below the poverty line.

Dragging projects, inflated costs,shady contracts,profiteering,disgruntled project affected people  this continues to be the story of  some of Uganda’s government and foreign funded projects.Uganda missed GAVI funds for over six years since 2006 when the organization suspended cash support to the country following the misappropriation of the $4.3m (about sh7,6b). Some public officials were found guilty of stealing the funds even as the then health ministers Jim Muhwezi, Mike Mukula and Dr. Alex Kamugisha were acquitted. The suspension of funding affected the country so much that immunization coverage dropped from 83% in 2008 to 76% in 2009/10, according to health ministry statistics. As the downward trend continued, the national immunization coverage reached 52% in 2011, turning Uganda into one of the countries with the lowest number of fully immunized children in the world. 

 

 

Proscovia Rujumba’s Aquaponics unit with flourishing tomato plants, Mparo village, Hoima district

Background

in November 2015, Water Governance Institute (WGI) began a three year project aimed at promoting commercial Aquaponics farming among smallholder farmers/households for water efficiency, food security and livelihoods improvement in Uganda. The project was informed by:

  • The need to provide alternative sources of fish considering that current natural fish stocks and sources (i.e. lakes, rivers & wetlands) are dwindling and unable to meet growing national and international market demands;
  • The need to safeguard fish species biodiversity that is threatened by overfishing;
  • The need to use water efficiently across the various food value-chains and other domestic and industry processes;
  • High incidences of malnutrition among many households related to protein, mineral salts and vitamin deficiencies attributed to poor quality diets;
  • The high premium market prices for fish and horticultural crop products and the impressive economic viability of Aquaponics farming compared to other alternatives;
  • Increasing poverty among majority of households in Uganda; and
  • Rampant un-employment among youth and women in Uganda.

 Aquaponics farming involves integrating fish rearing and horticultural crop farming in a closed-loop water recycling system. Fish is reared in a tank and the crops are grown in a grow-bed which may be located above or on the sides of the fish tank and interconnected with pipes to assist in recycling water from the fish-tank to the grow-bed and back again into the fish-tank.

 The crop-bed serves as a sanitation system to remove fish feces and breakdown the ammonia arising from the feces in the water. It is transformative in that it introduces integrated fish and horticultural crop farming to provide the much needed nutritional supplement and alternative incomes (if done commercially) in majority of the rural, urban or peri-urban household settings.

 It is a low-cost technology approach. It encourages rainwater harvesting and storage at the household level, which water can then be used for other domestic purposes. Through recycling of water, Aquaponics uses water efficiently and saves water that can be used in other household or food-value-chain processes. It is also gender sensitive - it can employ all gender i.e. men, women, youth, physically handicapped, and the elderly.

 The advantage of Aquaponics over other fish farming systems such as Rack Cages in Lakes and Ponds is that fish is protected from vermin (e.g. snakes, birds, frogs, rodents) and other externalities, including theft and floods. When managed properly, it is possible to harvest 98% - 100% of the fish fingerlings introduced into the system unlike other systems whose fish yields are usually less than 90% of stocked fingerlings.

 WGI recognizes the unique role of women in a typical Ugandan household, given that they are traditionally responsible for fetching water and providing food for the health and nutrition of their families. Their activities directly affect the environment, as well as being disproportionately affected by food insecurity and climate changes. Women also tend to be more committed to rearing/growing crops and livestock compared to men. It is against this background that WGI decided to meaningfully involve them in the project. The following is a story of Proscovia Rujumba (a.k.a Prossy Rujumba), whose life has been positively affected by Aquaponics farming.

One woman’s determination to become a fish farmer, Mparo village, Hoima district

  1. m Prossy Rujumba, is a 44 year old mother of 4 children, who lives in Mparo North Sub-country, Mparo village, Hoima district. For long Prossy was a simple pond fish farmer faced with several challenges. Vermin and flood loss often affected yields and threatened the viability of her fish farming project. On one occasion in 2014, she found all the fish in her pond had mysteriously disappeared.

 In 2015, Prossy was privileged to be among the people chosen by the local government of Hoima district to be trained by WGI on Aquaponics farming. She received severe training and sensitization on how to establish the Aquaponics system, how to manage it and the value of using the Aquaponics farming system. From the sessions, she was also able to gain knowledge on how to use water efficiently by reusing wastewater, innovative water capture and storage. She realized that this was a cheaper method of producing high quality proteins and crops at the same time.

 Armed with this knowledge, in May 2016, Prossy with the help of WGI set up the aquaponics system at her home in which she currently rears fish and grows horticultural crops.

 

Prossy pauses next to the Aquaponics unit where she was able to harvest the 225 fish and 96 tomatoes in the first harvest cycle. The unit now has new Eggplant crop that replaced the harvested tomatoes. She expects more good yields from the unit.

 “At first it was hard to believe the system works, I thought it was impossible but I gave it a try”, says Prossy. 

 After years of little to no success as a pond fish farmer, Prossy was able to harvest 200 fish each weighing 1kg from the first harvest using a one-cubic meter Aquaponics system. She had stocked 200 fish fingerlings in the unit. This means that she harvested 100% of the fish stocked. She also harvested 96 tomatoes that she sold at Ugx Shs.160,000(US$44.4). She was able to sell 195 fish at the cost of Ugx Shs.10, 000 each which earned her Ugx Shs.1,950,000(US$541.67) cash. The balance was eaten in her home. She has restocked the unit with new Eggplant crop and has order for a new fish fingerling stock.

 “With the Aquaponics unit at least am assured of the harvest unlike the pond” she says. “The benefits have been numerous; my family is healthier from the fish that was added to the diet. I have been able to support my husband provide basic needs for the family and also contribute school fees for my children”, she says. 

 Prossy is happy; “I am glad that my dream of becoming a commercial fish farmer is gradually coming to pass”, she narrates with a wide grin! She challenged WGI to give her a larger Aquaponics unit for her to realize her dream. She says the market demand is overwhelming when using smaller sized Aquaponic units. Albeit the low quality of the photograph, She shared with the WGI team a photograph of the fish she harvested from the unit 

 To date, Prossy has remained a star among fellow women in Mparo.She has also been central in helping community members appreciate Aquaponics farming.

 

 

“We are supporting rural households - especially women - adopt Aquaponics farming as a means of securing household food and income security. Using Aquaponics we are introducing unique businesses that efficiently use water and space and do not use soil as the main growth medium i.e. it is business unusual”, says Henry Bazira, the Executive Director of Water Governance Institute.

 

For more information visit  Get the Article here

Oil pundits sees Tullow Oil plc.’s new share sale a strategy to exit the country’s oil sector

 

London-Based Tullow Oil plc’s announcement that it is once again scaling down its stake in Uganda’s oil development, shedding off nearly two thirds of its shareholdings to the rival firm, Total E&P for $900million is raising fears that the firm could be slowly exiting the country’s oil sector.

Uganda’s oil resource, discovered in 2006 in the Albertan region, is estimated to contain about 6.5billion barrels and projected to produce around 230, 000 barrels per day.

The country has launched the Front End Engineering Design (FEED) study for the Hoima- Tanga crude pipeline a head of the construction currently estimated to cost about $ 3.5million.

“Uganda’s concession for Tullow is the largest in the region…selling a bigger part of it is a sign that it is exiting,” Don Bwesigye Binyina, an oil expert and executive director at the Africa Centre for Energy and Mineral Policy (ACEMP), told The Independent in an interview.

Binyina said that the new sale also confirms the notion that smaller companies in the oil sector are struggling and it is only the big boys that can handle the expensive sector.

This is the second time that Tullow is selling off its stakes in Uganda. In 2012, the company sold 66.6% stake in the country’s oil sector for equal share to the two then new players- Total and CNOOC at a whopping $2.9billion.

But Aidan Heavey, the chief executive officer for Tullow downplayed the claim.

“I am particularly pleased that Tullow’s long-term commitment to and presence in Uganda is guaranteed by this transaction and that we will remain an active investor in Uganda’s oil and gas sector,” Heavey said.

The new sale means that Tullow now retains 11.76% interest in the upstream and pipeline, which would reduce to 10% when the Ugandan government formally exercises its right to back-in.

The sale interests affect exploration Areas 1, 1A, 2 and 3A. However, this is subject to approval from the government.

Total payment is structured as; $200 million in cash consisting of $100 million on completion of the transaction, $50 million at both Final Investment Decision and First Oil, and then $700 million in deferred consideration to be used by Tullow to fund the company’s share of the costs of the upstream development project and the associated export pipeline project.

The Group expects a pre-tax write-off as a result of this disposal of approximately $400million to be booked in its 2016 Full Year Results.

Once this transaction has been completed, Tullow will cease to be an operator in Uganda but will retain a presence in-country to manage its non-operated position.

Heavey hints on future

Heavey said the transaction will allow the Lake Albert Development to move ahead swiftly, increasing the likelihood of FID in 2017 and first oil by the end of 2020.

He added that the deal will secure future cash flow for the Group from one of the industry’s few truly low cost development projects without any additional cash requirements expected.

“We will work closely with the Government of Uganda, its associated agencies and with Total and CNOOC to move this transaction forward as smoothly as possible over the coming months,” he said.

The Uganda Revenue Authority— which was at the centre of a similar transaction between Tullow and Heritage a few years back, however, said the two companies (Tullow and Total) are in preliminary processes of effecting the transaction but will involve at a later stage for the purposes of getting the capital gains tax.

“As URA we will be involved at some point,” URA’s Corporate and Public Affairs Manager Sarah Banage said.

It is until 2015 that that Ugandan government won the $400million capital gains tax in a protracted legal battle against Heritage Oil in Kampala and London. This was after Heritage Oil sold its stake in Uganda’s oil sector to Tullow at $1.45bn.

****

source: independent.co.ug

Diana Taremwa, a Program Officer responsible for the Extractive Sector at Water Governance Institute is featured in an article published on Chimpreports and New Vision online news platforms. She expresses that the shs6billion doled out to senior government officials as a token of appreciation for their peripheral role of winning the courts case in London against Heritage Oil and Gas Capital Gains Tax dispute is a wake-up call on Ugandans on the onset of vices characteristic thrift and wasteful spending of resource-revenues as they begin trickling into the treasury; corruption, patronage-buying, elite-capture of the revenues; and politics of regime survival. She warns that Ugandan need to wake-up and ensure that governance is in accordance to the set policies and legislation (rule of law) governing natural resources. Below are her views;


 

Media has recently been awash with stories about how senior government officials who oversaw the tax dispute settlement between government and international oil company Tullow were awarded shs.6 billion as a token of appreciation.

The latest of is a “controversial injunction” in which Justice Steven Kavuma stopped parliament from probing officials who received the money. Parliamentary speaker Rebecca Kadaga described the ruling as “stupid” in what appears the first major blow of 2017 between the two vital arms of government. However, this injunction has since been withdrawn.

To Ugandans, such acts, ambiguous undercurrents and tensions do not foreshadow smooth sailing of the oil and gas sector. In fact, they only serve to confirm our skepticism towards what is happening behind closed doors and away from the watchful eye of the public.

At the same time, such incidents are clearly born out of conditions  that have for a long time Since the discovery of oil in 2006 characterized the sector. Disregard of constitutionalism, the rule of law and democracy, corruption, land grabbing ,mistrust and last but not least a terminal lack of access to information  are but some of the characteristics of  Uganda’s oil and gas sector.

According to the Ministry of Energy and Mineral Development, commercial production wil not begin until 2020. It also means that Ugandans still have a little more time to clean up their house and prepare better for oil production. An opportunity to, address the bigger governance issues that may affect equitable development of the oil resource.

Ugandans need to be more effective and involved in the oil and gas sector so as to ensure transparency and accountability as this is the only way the sector will deliver on the transformation that the oil resource promises.

Oil revenues if well utilized can solve problems that we continue to suffer as a country such as  poor quality education, chronic unemployment and poor health facilities and services . Conversely, mismanagement of the oil resources may also leads to social, economic and political consequencesfor instance increased poverty and income inequality, corruption and a general break down of government systems.

Civil society within its capacity as watch dogs of the sector need to ensure that  laws, regulations and processes put in place are implemented in a transparent, participatory and inclusive manner .

At Water Governance Institute we recognize that local communities in particular the oil hosts need to be empowered to influence the discourse on oil governance and cause tangible change. We are empowering them with knowledge and information on their rights so that they become an influential voice and take action.

Youth who hold the future of this nation and comprise of 78% of the population also need to be empowered to advocate for transparency in the sector. only then will their dream of the oil sector delivering the much needed jobs become a reality.

Ugandans are teetering on the brink of what might be their last chance at transformation and economic success, being torn to shreds by the jaws of the all-powerful few entrusted with overseeing the running of the oil sector. It is thus important that we take action now to avert a looming resource governance crisis in Uganda


 source: Chimpreports  & New Vision  online news platforms

Heritage Oil and Gas sold out to Tullow in 2010 and made an income that was subject to a 30% Capital Gains Tax (CGT) of about US$434million. Heritage Oil was reluctant to pay the tax and government of Uganda sought to sue Heritage Oil for the tax. A case was filed by Heritage Oil in British Courts in a bid to dodge paying the tax. Uganda and Tullow Oil were respondents in the case.  In 2011, President Yoweri Museveni met senior officials from URA and four lawyers who assured him of a win, if he pursued litigation measures against Heritage. The President promised the lawyers and URA a “handshake” if they won the case. Uganda hired Curtis Mallet-Provost, Colt & Mosle LLP - an international law firm - at a cost of about $10m to help in the litigation in London. Alongside this law firm, a local firm Kampala Associates was hired at a cost of Shs.2billion in legal fees to support the legal battle. URA lawyers and staff at the Attorney General’s Office also participated in the legal suit. The case was ruled in favour of Uganda and Tullow. Consequently, Tullow oil remitted the CGT it had withheld from Heritage to URA.

It was reported in the media that on May 17, 2015 President Museveni met URA lawyers and other high-level officials who had participated in the Capital Gains Tax case and was reminded of the promise he had earlier made in respect of rewarding the winning team with a “handshake”. It is reported that during the meeting, President Museveni directed URA Commissioner General Ms. Doris Akol to recommend an appropriate reward for the team. 

Media further reported that on June 26, 2015, a month later, Ms. Doris Akol, the Commissioner General of URA, proposed to the President that a sum of Shs6billion was an appropriate reward to the team, arguing that it was less than 1% of the amount in the award and is 50% of the costs awarded to the government of Uganda. She further argued that of the 6billion, 2.3billiong would be deducted as tax and the net sum to be paid to the awardees would only be 3.6billion. According to the reports, Akol further attempted to justify the amount saying that it would enable beneficiaries use the funds for something tangible i.e. to leave a legacy to remind them and their offspring of their contribution to the nation – for instance the recommended amount could enable one to either acquire a decent plot of land; pay a deposit on mortgage or perhaps facilitate finishes on home construction. Akol is said to have further suggested that the Shs 6bn would be motivation sufficient for them to gallantly face future challenges and bring glory and victory to our nation. The URA Commissioner General is reported to have told Museveni that the amount proposed would be distributed among 42 individuals that make up the core, non-core and support staff of the team (Read more). Interestingly, the top beneficiaries of this project, including Akol, are well paid government officials. Akol is reported to earn Shs 40m (gross) per month as salary minus other benefits.

President Museveni is reported to have responded to Ms. Akol’s proposal to award the team the Shs6billion in a letter addressed to the Minister of State to Finance Matiya Kasaija recommending the payment to be made as a token of appreciation.

While there is nothing wrong with awarding public officials for jobs well done or their contribution to national matters, Water Governance Institute is of the opinion that the manner in which such a payment was done was erroneous and violated many governance principles, including the following:

  1. URA is essentially responsible for the assessment, collection and disbursement of tax from the tax payers to the Consolidated Fund through the Ministry of Finance, Planning and Economic Development. Having taken on the role of making payment off the Consolidated Fund without Parliamentary approval was a violation of URA’s role and the Public Finance Act 2015.
  2. Even though the Public Finance Act 2015 accords the Secretary to the Treasury powers to appoint accounting officers, this power does not include changing the overall mandate of URA or violating procedure that involves parliament’s appropriation of expenditure of national character.
  3. URA is responsible for the payment of costs and wages of its staff and related core operations. Having made payments to individuals that are not URA staff or individual’s on URA’s associated assignments/contracts was a violation of its mandate.
  4. Government of Uganda had already contracted an international and local law firms to represent it in the Capital Gains tax dispute in London and were dully paid a sum of US$10million and shs2billion, respectively and the case was won. It was no longer necessary for government to incur additional costs in quote “a token of appreciation” to officials that were already doing work they were (are) already assigned in their regular jobs with remunerations and other related benefits. This set bad precedent in a country where there are numerous public officials that have done honorable jobs, but have gone unnoticed or unappreciated such as teachers; nurses; doctors; prison officers; police officers; army officers and other public servants; where there are court awards that have not seen the light of day for many years; and where pensioners and their next of kin have remained unpaid for many years.
  5. This payment having been made at a time when the cost of living for many citizens is unbearable; when there is high inflation that has devalued many assets to the extent that people are not earning the true value of their assets; and when there is a widening political and economic divide between the haves and have-nots, is a miscalculation of the highest order.   

It is against this background that Water Governance Institute criticizes the Shs.6billion cash rewarded to public servants involved in the Heritage and Tullow Oil Capital Gains Tax Dispute Case. In this respect, the Executive Director of Water Governance Institute, Mr. Bazira Henry Mugisha was recently featured on an NTV “On the Spot program” where he expressed these concerns. Details to this TV talk-show can be found in the video below

 

 It is disheartening to realize that even the Auditor General was aware of the shoddy Presidential Hand Shake and he seemed to sanction it[Read more].

Evidence that Auditor General was aware of the shoddy Presidential Hand Shake

Lawyers move to sue Commissioner General URA Mrs Akol. Firm behind court order barring debate on oil apologizes to Speaker Kadaga. 

 

 

Tullow Oil had sold two-thirds of its stake in Uganda's first ever oil development to its partner, French major Total, for $900m.

The giant project on the shores of Lake Albert, where Tullow first discovered oil in 2006, is estimated to contain 1.7bn barrels of oil and forecast to eventually produce 230,000 barrels per day (bpd).

Its development is expected to cost $3bn to get to first oil production, and require a further $3.5bn to be spent on a new pipeline to export the oil through Tanzania. 

Ownership of the licence areas had been evenly split between Tullow, Total and China's CNOOC but under Monday's deal Tullow will sell Total a near-22pc stake, leaving it with just under 12pc.

Total is to pay $100m cash on completion, further installments of $50m at the final investment decision and again at first oil, and then a $700m deferred payment to fund Tullow's share of the development. 

Aidan Heavey, chief executive, said the agreement would "allow the Lake Albert development to move ahead swiftly, increasing the likelihood of final investment decision in 2017 and first oil by the end of 2020".

He said the deal would "secure future cash flow for the group from one of the industry's few truly low cost development projects without any additional cash requirements expected". 

Tullow's shares spiked 2.5pc on the news to close at 332.98p.

Tullow's stake will eventually fall to to 10pc when the Ugandan Government exercises its right to a share in the project, leaving it with a share of 23,000 bpd. That compares with group production currently thought to be close to 90,000 bpd. 

Tullow said it expected to write off $400m pre-tax in its full-year results, reflecting the fact it had been carrying a higher value for the assets. However, analysts at RBC Capital Markets said the charge "should largely be considered as noise"

Tullow's shares have fallen from highs of more than £15 in 2012 to less than a tenth of that at the start of this year. However, they have staged a modest recovery as the oil price has rebounded.

Separately, Genel Energy was boosted by a new oil discovery by its partner DNO at the Tawke field in Kurdistan. However, it also suffered a downgrade by analysts at Jefferies on concerns over declining output from its Taq Taq oil field. Genel shares edged up 0.41pc to 84.1p.

Source: The Telegraph Investigator

FILE - An oil well undergoes testing in the Lake Albertine region of western Uganda in 2010.

 

Hefty bonuses paid to Ugandan officials who oversaw tax dispute settlements with international oil firms are a sign hydrocarbon discoveries are increasing corruption in the country, government opponents and transparency campaigners said.

Commercial production is due to start in 2020 and some campaign groups are warning Uganda is already suffering the resource “curse,” in which a rush of petro-dollars suffocates the rest of the economy, encourages graft and stirs unrest.

Uganda first discovered oil more than a decade ago but production has been stalled by lengthy rows between government and oil companies over tax payments and infrastructure.

40 officials reportedly received bonuses

Local media reported some 40 senior officials in the impoverished country's tax agency, energy, finance and justice ministries received bonuses, some exceeding $100,000.

“This is nothing but the beginning of the resource curse,” said Dickens Kamugisha, chief executive officer at African Institute for Energy Governance (AFIEGO).

The Uganda Revenue Authority (URA), which paid the officials, said the bonuses were legal.

Payouts justified

A first tax row erupted in 2010 between President Yoweri Museveni's government and Heritage Oil after the firm sold its stake in two oil blocks to its then partner, Tullow Oil.

The government netted $434 million after arbitration.

In a second case, Tullow disputed a Uganda tax assessment of $473 million against its asset sale to China's CNOOC and France's Total in 2012. Tullow paid $250 million in an out-of-court settlement in 2015, nearly half of what was originally claimed.

The URA said in a statement that the payouts were to “appreciate the professionalism and ... ability to resist all pressure and compromise given the magnitude of the figures involved.”

About 6 billion shillings ($1.66 million) were paid out in total to officials who included the head of the URA, the Treasury's top technocrat and a former attorney general.

Leader wants money returned

Ugandans have expressed anger at the payments on social media and on radio talk shows, asking why well paid civil servants had to be rewarded for doing their job.

Independent legislator Wilfred Niwagaba told Reuters he planned to introduce a parliamentary motion on Jan. 10 demanding the bonuses be returned and the recipients prosecuted.

“This is contemptuous abuse of public funds. How do you talk of bonus payments as if government is now a profit-making company. We're staring a resource curse in the face,” Niwagaba said.

The motion is unlikely to gain traction in an assembly dominated by the ruling National Resistance Movement party.

Source: Voice of America 

What is the point in aggrandizing people who were side walkers in the case?

Senior government officials who oversaw the tax dispute settlement between government and international oil company Tullow were recently awarded shs.6 billion as appreciation for winning the case for Uganda, which has sparked off a firestorm among Ugandans. In what has been dubbed “the golden handshake”, Ugandans have continued to question this act by that symbolizes manifestation of corruption in the country, lack of transparency and accountability in the oil sector, a precursor for the oil curse. 

The latest of is a “controversial injunction” in which Justice Steven Kavuma has stopped parliament from probing the officials who received the money (Read more). Parliamentary speaker Rebecca Kadaga described the ruling as “stupid” in what appears the first major blow back of 2017 between the two vital arms of government (Read more).

“Awarding public servants is ok but it should be on a certain criteria. The reward in itself is not wrong but the manner and process in which the reward was made”, says Henry Baziira , Executive Director Water Governance Institute .

‘Lawyers were hired and paid $10 million, served their purpose then why should you go ahead and spend money on side walkers or on lookers. It’s a double payment which is unfair to Ugandan tax payers”

The first tax row erupted in 2010 between government and Heritage Oil after the firm sold its stake in two oil blocks to its then partner, Tullow Oil. The government netted $434 million after arbitration. In a second case, Tullow disputed a Uganda tax assessment of $473 million against its asset sale to China's CNOOC and France's Total in 2012. Tullow paid $250 million in an out-of-court settlement in 2015, nearly half of what was originally claimed.

At Water Governance Institute, we believe that Kavuma’s ruling does not serve the interests of Ugandans, government and even businesses in the oil industry. Clearly; Justice Kavuma has failed to deliver justice to Ugandans (Read more). 

For more on our position, watch the video above in which Mr .Henry Baziira appeared on NTV a local television station to raise his voice about the issue.

Below is the Parliamentary Speaker Rebecca Kadaga's Order

 

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