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OFFICE OF THE AUDITOR GENERAL

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A REPORT BY THE AUDITOR GENERAL

DECEMBER 2017

Impact of the PRiDe Project implemented by MAAIF - December 2017

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A REPORT BY THE AUDITOR GENERAL

DECEMBER 2017

THE REPUBLIC OF UGANDA


THE COMPENSATION OF PROJECT AFFECTED PERSONS UNDER THE REFINERY PROJECT BY THE MINISTRY OF

ENERGY AND MINERAL DEVELOPMENT

28th December 2017

The Rt. Hon Speaker of Parliament

Parliament of Uganda

Kampala.

VALUE FOR MONEY AUDIT REPORT ON THE COMPENSATION OF PROJECT AFFECTED

PERSONS UNDER THE REFINERY PROJECT BY THE MINISTRY OF ENERGY AND MINERAL

DEVELOPMENT

In accordance with Article 163(3) of the Constitution, I hereby

submit my report on the audit undertaken on the Compensation of

Project Affected Persons under the Refinery Project implemented by the Ministry of Energy and Mineral Development.

My office intends to carry out a follow-up at an appropriate time regarding actions taken in relation to the recommendations in this

report.

I would like to thank my staff who undertook this audit and the staff

of the Ministry of Energy and Mineral Development implementing

this project for the assistance offered to my staff during the period

of the audit.

John F.S.Muwanga

AUDITOR GENERAL

AUDITOR GENERAL’S MESSAGE

Compensation of PAPs under the Refinery Project by MEMD

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LIST OF TABLES...............................................................................................................................................................................ii

LIST OF FIGURES ii

ACRONYMS iii

EXECUTIVE SUMMARY iv

CHAPTER ONE 1

1.0 INTRODUCTION 1

1.1 BACKGROUND TO THIS STUDY 2

1.2 MOTIVATION 2

1.3 DESCRIPTION OF THE AUDIT AREA 3

1.4 AUDIT OBJECTIVE 4

1.5 AUDIT QUESTIONS 4

1.6 AUDIT SCOPE 4

CHAPTER TWO 5

2.0 AUDIT METHODOLOGY 6

2.1 TIMELINESS AND ADEQUENCY OF CASH COMPENSATION 6

2.2 TIMELINESS AND ADEQUACY OF RESETTLEMENT 7

2.3 GRIEVANCE-HANDLING MECHANISMS 7

CHAPTER THREE 8

3.0 SYSTEM AND PROCESS DESCRIPTION 9

3.1 ROLES AND RESPONSIBILITIES OF KEY PLAYERS IN MANAGEMENT OF PAPs 9

3.2 PROCESS DESCRIPTION FOR MANAGEMENT AND COMPENSATION OF PAPs 10

CHAPTER FOUR 12

4.0 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 13

4.1 OVERVIEW OF THE PROGRESS OF RAP IMPLEMENTATION 13

4.2 TIMELINESS AND ADEQUACY OF CASH COMPENSATION TO PAPS 15

4.3 TIMELINESS AND ADEQUACY OF RESETTLEMENT 24

4.4 GRIEVANCE HANDLING 34

4.5 SOCIO-ECONOMIC BASELINE SURVEYS 36

Appendix 1: Documents reviewed 38

Appendix 2: Interviews conducted 40

Appendix 3: Uniformity of rates 41

Appendix 4: Schmidt hammer test results for constructed school facilities 42

Appendix 5: Unresolved grievances 43

Table of Contents


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LIST OF TABLES

Table 1: Funding 4Table 2: Progress of RAP Implementation 13Table 3: Contract details of SFI 14Table 4: Payment Receipt date vs. Actual Payment date 16Table 5: Overvaluation of customary land 18Table 6: Undervaluation of customary land 18Table 7: Delays in approval of submission rates 19Table 8: PAPs that declined to sign due to low rates 20Table 9: Payments per Financial Year under review 23Table 10: Actual versus would-be payment during FY 2016/17 23Table 11: Planned and actual completion dates as per inception report and contracts 25Table 12: Summary of causes of the delays 26

LIST OF FIGURES

Figure 1: Process description for management and compensation of PAPs 11Figure 2: Time taken to compensate PAPs 15Figure 3: A silted water source at Kyapaloni village 27Figure 4: Quality aspects/ defects and poor workmanship on implemented infrastructure 29Figure 5: Examples of unresolved grievances 35


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ACRONYMS

CGV Chief Government Valuer

DLB District Land Board

HDLB Hoima District Land Board

IFC Intenational Finance Corporation

MEMD Ministry of Energy and Mineral Development

MLHUD Ministry of Lands Housing and Urban Development

NGO Non-Governmental Organisation

PAPs Project Affected Persons

PEDPD Petroleum Exploration, Development and Production Directorate

RAP Resettlement Action Plan

RAPIA Resettlement Action Plan Implementation Agency

SFI Strategic Friends International


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Following the commercial oil discoveries in the Albertine Graben and the decision by the Government of Uganda to

construct an oil refinery in Kabaale, Buseruka sub-county, Hoima district, a Resettlement Action Plan (RAP) was

developed by the Ministry of Energy and Mineral Development (MEMD) to guide compensation and/ or resettlement

of an estimated 7,118 Project Affected Persons (PAPs) in this area. The PAPs comprised 1,221 households and 2,473

directly affected land owners and licensees.

Despite the social sensitivity of the exercise and the substantial investment in the project of UGX 86.78 billion, there are

concerns that the eight months compensation project which began on 13th June 2013 and was expected to have ended

by 13th February 2014, is still far from completion with significant delays in compensation of over 4 years.

The Office of the Auditor General conducted a Value for Money audit to assess whether MEMD adequately compensated

the PAPs in a timely manner. The audit covered 6 financial years from FY 2011/12-2016/17.

KEY AUDIT FINDINGS

1. OVERVIEW OF THE PROGRESS OF RAP IMPLEMENTATION

The project experienced significant delays in the implementation of major RAP activities, ranging from 20 months

to over 4 years. It was noted that whereas the monitoring and evaluation activities were supposed to be continuous

from inception, the consultant was procured in June 2017. Similarly, the livelihood restoration programme which was

scheduled to be implemented by September 2013 commenced in August 2017. Additionally, the procurement of an

NGO to carry out compliance audits on the implementation of the RAP had not started by the time of audit (November

2017). Delayed implementation of the RAP necessitated extending the contract of Strategic Friends International

(SFI), a consultant engaged to manage the RAP, five times and increased the cost of the consultancy services by UGX

1,239,760,000.

2. TIMELINESS AND ADEQUACY OF CASH COMPENSATION TO PAPs

• Out of the 2,680 PAPs who were eligible for cash compensation, 2,657 had been paid by the time of audit (November,

2017) representing 99%. It was however noted that out of the 2,657 PAPs, only 104 (representing 4%) were paid

within the prescribed timeframe. There were significant delays ranging from less than 6 months to over 2 years to

compensate the remaining 2,553 (96%) of PAPs. Consequently, by the time they received their money, the price of

land in neighbouring villages had risen, making it difficult for them to acquire land of equivalent size.

• Whereas the Chief Government Valuer (CGV) approved the valuation methodology submitted by SFI outlining the

procedures to be used for valuation of property permanent in nature, this methodology was not followed during

valuation of customary land in the 5 villages of Nyamasoga and Nyahaira, Bukoona A, Katooke and Kayera. The value

Executive Summary

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of customary land was overvalued in two (2) villages

and undervalued in three (3). These anomalies resulted

in a loss of UGX 295,750,800 to government and UGX

16,172,100 to the PAPs, respectively.

• Unapproved rates were used for compensation of

almost all PAPs. Whereas compensation commenced

in FY 2013/14, the rates used were for the FY 2011/2012

which were unapproved and obsolete. In addition, the

CGV did not approve rates submitted by the Hoima

District Land Board (HDLB) between FY 2013/14 and FY

2015/16. This resulted in grievances among the PAPs

and delays in the compensation process.

• Compensation rates were not applied uniformly. 43.2%

of sampled PAPs had their crops valued at rates

different from the recommended rates by the district

land board.

• Although cash compensation was done over several

years, MEMD did not adjust the compensation values

to cater for the market price adjustments in the various

years of payment. In 2016/17 when updated rates for

properties were approved by the CGV, only 2 PAPs had

their rates revalued. Consequently, their total payments

increased from UGX 1.029 billion and UGX 74,222,200

to UGX 2.220 billion and UGX 189,250,750 respectively.

This violated the principle of fairness in compensation

3. TIMELINESS AND ADEQUACY OF RESETTLEMENT

• Construction of the houses for the PAPs and other

resettlement infrastructure such as schools and

health centres which was supposed to commence in

October/November 2013 was delayed by two (2) years.

The residential houses and Buseruka Health centre III

were completed in 2017 while the construction of the

schools was not yet complete by the time of audit in

November 2017.

• Forty six (46) resettlement houses were constructed

results for the school facilities revealed that they were

within the required range of 25Mpa which is within the

various structural components of the buildings. Based

on visual assessment during inspections undertaken

in November 2017, the quality of works of the health

centres, 46 resettlement houses, and the schools was

acceptable. However, there were instances of poor

workmanship, mainly on the schools. For example, the

concrete tank bases had failed, cracks were noted on

precast slabs were poorly aligned.

• Whereas the PAPs were consulted during land

acquisition, their concerns were not considered during

implementation by SFI.

4. GRIEVANCE HANDLING

There was neither a grievance management database

were not given copies of the grievance initiation form

and as such were left with no proof of having lodged

complaints. Further still, the mediation committee was

not constituted. Whereas a number of grievances were

reportedly resolved as per March 2014 grievance status

report, there were grievances that remained unresolved

at the time of audit.

5. SOCIO-ECONOMIC BASELINE SURVEYS

It was noted that whereas the RAP study registered 7,118

PAPs in total, there was no documentation of how this

an explicit list to show all the PAPs due to absence of

primary data. There was also a variance between the

number of PAPs reported during the census and those

the RAP while 2,657 were paid.


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KEY RECOMMENDATIONS

1. MEMD should ensure that key planned project

activities are prioritized, closely supervised and

monitored to ensure that the expected deliverables

are achieved as planned.

2. In the subsequent projects of this type, MEMD should

ensure the following:

• Comprehensive planning is done, including

sensitization of the PAPs and the involvement of NGOs,

so as to quicken the disclosure exercise.

• The RAP consultant adheres to compensation

guidelines for purposes of fairness. PAPs should

be profiled so as to ensure timely payment to avoid

speculation.

• The CGV closely supervises and monitors the valuation

exercise for future compensation projects and ensure

that the approved valuation methodology is adhered to

by the implementing entity/consultant.

• Similarly, where circumstances may require deviation

from the approved methodology, the CGV should ensure

that the amendments are approved before they are

applied for valuation. This will not only avoid discontent

among PAPs but would also save government funds

allocated to specific compensations.

• Liaise with the CGV to ensure the following:

a. The rates used to compensate PAPs are the prevailing

rates in the year of payment in order to minimise

disputes with PAPs.

b. Guide DLBs on when they should submit proposed

rates in order to ensure timely approval. In case of

non-approval, the CGV should communicate his/her

reasons to the DLB.

c. The rates submitted by HDLB are comprehensive to

cater for all categories of property of non- permanent

nature before approval. In cases where compensation

rates are determined at the discretion of MEMD/

consultant, they should be done in consultation with

the CGV and applied uniformly.

d. Compensation values are adjusted annually to reflect

annual market prices. In addition, MEMD in liaison with

the CGV should ensure that in future compensation

projects, the RAP consultant applies the adjusted rates

uniformly to all PAPs to ensure fairness and adequacy

in compensation.

3. The Accounting Officer (MEMD) should ensure that:

• Payments are effected as per terms in the signed

contract as any delay in effecting payments affects the

contractor’s cash flows and subsequently the progress

of works.

• Better planning for any future projects in respect of

delayed site possession by the contractor.

• Adequate planning and thorough review of design

documents before approval and implementation. This

would enable any major omissions to be noted and

included at an earlier stage for better planning.

• Better coordination with any of the line Ministries

involved in future projects in respect of approvals of

designs for health facilities and opening of boundaries

where boundary disputes are impeding project

implementation.

• Defects are remedied before handover of the schools,

and expiry of the defects liability period for the 46

houses and health centres.

• Supervision and monitoring of capacity for works is

strengthened to ensure adherence to agreed quality

standards during contract execution.

• In future projects, issues of concern discussed with

the PAPs are duly implemented and where there are

deviations adequate sensitization of PAPs should

be undertaken for acceptance of the project and

compliance with international standards.

4. MEMD should ensure that proper grievance-

management mechanisms are put in place to address

any complaints that arise as per prescribed process.

5. The MEMD should ensure that in future projects,

sufficient data of the PAPs is captured during the

social economic survey to enable proper reconciliation

of the total population and the PAPs eventually paid

for assurance that eligible people benefit from the

compensation.


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OVERALL CONCLUSION

There were notable achievements in the compensation of PAPs in the refinery project. MEMD successfully compensated

99% of the PAPs who were eligible for compensation. Some infrastructure works such as construction of 46 residential

houses and improvement and expansion of Buseruka Health centre have been completed and handed over to the

Ministry. The quality of the infrastructure was to a great extent assessed as satisfactory.

The foregoing notwithstanding, significant delays were noted in the overall implementation of the project particularly in

payment of PAPs and construction of resettlement infrastructure. Key activities of the RAP such as procurement of a

consultant to undertake monitoring and evaluation of the project, construction of schools and places of worship, as well

as implementation of the livelihood restoration programme were delayed as well.

The use of unapproved/obsolete valuation rates was noted in almost all the years of compensation, and rates were not

applied uniformly thereby causing grievances and delays in the compensation process. Failure to adhere to the PAPs’

proposals during construction of resettlement houses also affected acceptance.

It is hoped that the proposed recommendations will go a long way in improving the management of future compensation

projects.


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1.0 INTRODUCTION

1.1 BACKGROUND TO THIS STUDY

Uganda made commercial oil discoveries in 2006 in

the Albertine Graben in the Western arm of the East

African Rift Valley estimated at 6.5 billion barrels of

oil equivalent1. Since then oil related activities have

been underway under the governance of the Ministry

of Energy and Mineral Development as the principal

ministry charged with the management of the mineral

resources2.

For the purpose of value addition, the government made

a decision to construct an oil refinery3 after a feasibility

study that was undertaken through Foster Wheeler

Energy Limited in 2010/20114. The study recommended the

size of the refinery to be developed, type of configuration,

financing mechanisms and the actual location of the

refinery.

Following the recommendations of the feasibility study,

MEMD earmarked 29 square kilometres of land in

Kabaale, Buseruka sub-county, Hoima district and

contracted Strategic Friends International- to prepare a

Resettlement Action Plan (RAP) which formed the basis

of the compensation and resettlement of Project Affected

Persons in that area5. The RAP envisioned displacing

7,118 Project Affected Persons (PAPs) comprising of 1,221

1Ministry of Energy and Mineral Development (MEMD), 2008;National Oil and Gas policy page ii2MEMD,2008;National Oil and Gas Policy of Uganda Page 33MEMD,2008;National Oil and Gas Policy of Uganda Page x, 34 and objective 4(vi):Uganda Vision 2040 page 48 and 49: Uganda National Development Plan pages 44 and 1004Uganda Refinery Summary Report, Ministry of Energy and Mineral Development, Uganda, 20115Contract between MEMD and Strategic Friends International6Resettlement Action Plan, page vi7The Tanzanian Resettlement Policy Framework Page 3 and 4:

Chapter One

households and 2,473 directly affected land owners and

licensees6 .

“Project affected persons” (PAPs) are persons who,

for reasons of the involuntary taking or voluntary

contribution of their land and other assets under a

project, suffer direct economic and or social adverse

impacts, regardless of whether or not the said PAPs

physically relocate7. These should be compensated and

resettled with the ultimate goal of maintaining their

welfare without making them worse off compared to their

initial state. The implementation of the RAP by Strategic

Friends International (SFI) commenced in June 2013 and

was expected to end in February 2014.

1.2 MOTIVATION

While Uganda’s oil discoveries have the potential to

enrich the national economy and enhance development,

they also have the potential to create new land conflicts

or exacerbate existing ones.

In Uganda, ownership and control of minerals and

petroleum in, on or under any land or waters in the

country is vested in the Government under Article 244 and

part XIII of the Constitution of the Republic of Uganda,

1995. The National Oil and Gas Policy, 2008, emphasised

that the oil and gas activities (exploration, development,

production, processing and transportation) would affect

and be affected by legislation pertaining to land and


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gravely impact on land ownership and use8. Indeed these

projects/activities have affected the persons in the areas

of operations in terms of their land for cultivation and

residence.

Following the implementation of the RAP, several concerns

have arisen in regard to compensations. For instance, the

families that had opted for the resettlement option had not

been resettled since July 2013 after the commencement

of the implementation of the Resettlement Action Plan

(RAP) and yet the RAP had provided for their resettlement

within a year after assessment., Similarly, the PAPs

disagreed with the design of the proposed houses given

the social set up of their families9. It was also reported

that Civil Society Organisations (CSOs) incited the PAPs to

reject the RAP implementation process10.

There was limited provision of funds by the government

as the budget requirements for compensation and

relocation was greater than the budget provisions made

for the financial year (FY) 2013/201411. In addition, social

amenities such as expanded schools, health centre IIIs,

water sources envisioned in the new places for relocation

had not been provided, thus interfering with the rights of

those affected. There were also complaints that the PAPs

could no longer access their land including sources of

livelihood yet they had not yet been paid their money.

There have also been concerns by the PAPs about

the application of out dated rates in Hoima district for

compensations relating to their crops and buildings of a

non-permanent nature.

In light of the above, the Office of the Auditor General

(Uganda), undertook a Value for Money (VFM) Audit to

assess whether MEMD adequately compensated the

PAPs in a timely manner.

1.3 DESCRIPTION OF THE AUDIT AREA

1.3.1 Legal Framework for Compensation of the PAPs

The Mandate of the Ministry of Energy and Mineral

Development is:

“To establish, promote the development, strategically

manage, and safeguard the rational and sustainable

exploitation and utilization of energy resources for social

and economic development”.

The detailed policies and laws include:

• The Constitution of the Republic of Uganda ,Article

26(2)

• National Oil and Gas Policy,2008

• The Land Act 2004 & 2010

• Land Acquisition Act,1965

• The Resettlement Action Plan For The Proposed

Acquisition Of Land For The Oil Refinery In Kabaale

Parish, Buseruka Sub-County, Hoima District 2012

1.3.2 Objective and principles of Compensation

The principal objective of compensation of the PAPs is to

maintain an individual’s welfare, without making he/she

worse off compared to his/her initial state.

Compensation refers to payment of the project affected

persons for the losses incurred and should be based

on the principle of equity and equivalence. In order to

obtain equity and equivalence, the following key guiding

principles have to be adhered to:12

a. Fairness and transparency

b. Flexibility

c. Balance of interest.

8The National Oil and Gas Policy, 2008, page 3 9Oil in Uganda,2017.Refinary residence to be relocated in February10MEMD Annual Report 2013 and African Institute for Energy Governance: Implementation of the oil refinery RAP in Uganda.11Ibid.12MEMD, 2012, Resettlement Action Plan, page 6


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1.3.3 Funding

All the funding budgeted for compensation of PAPs was

disbursed as shown in Table 1.

Table 1: Funding

1.6 AUDIT SCOPE

The audit focused on the Petroleum, Exploration,

Development, and Production Department (PEDPD),

being the department directly in charge of compensation

of the Project Affected Persons (PAPs) in the petroleum

sector under MEMD. It also covered the Ministry of Lands,

Housing and Urban Development (MoLHUD) which is the

technical arm in the land compensation process in the oil

refinery area.

The audit also required visiting the district of Hoima

particularly Buseruka sub-county, Kabaale parish. The

area constitutes the twenty-nine (29) square kilometers

with thirteen (13) villages that were directly affected by the

oil refinery project. These include Kyapaloni, Nyamasoga,

Bukona A and B, Kitegwa, Kabaale 1 and 2, Nyakasinini,

Nyahaira, Katooke, Kigaaga A and B, Kayeera and

Kijjumba. Kyakaboga village was also visited because

this is where the PAPs who opted for resettlement were

to be resettled.

Also, the audit involved visiting nearby villages to

ascertain the impact of the influx of PAPs from the oil

refinery and also interview them in regard to the process

of compensation. These included Kaseeta, Kyakaboga,

Nyakabingo, Zorobi, Cunga-jembe, Kanyegaramire all in

Buseruka sub-county and Hohwa in Kabwoya sub-county.

The audit covered six (6) financial years (FY) from 2011/12

to 2016/17.This was because the RAP for the refinery

commenced in FY 2011/12.

FY Budgeted (billion UGX) Actual (billion UGX)

2011/12 10 10

2012/13 2 2

2013/14 23.24 23.24

2014/15 29 29

2015/16 22 22

2016/17 0.54 0.54

Total 86.78 86.78

Source: OAG analysis of information from MEMD

1.4 AUDIT OBJECTIVE

The main audit objective was to assess whether MEMD

adequately compensated the PAPs in a timely manner in

order to achieve the intended objectives.

1.5 AUDIT QUESTIONS

1. To what extent were the PAPs entitled to cash

adequately and timely compensated/paid?

2. To what extent were the PAPs entitled to resettlement

adequately and timely compensated/relocated?

3. To what extent were mechanisms put in place to

ensure grievances were handled expeditiously?


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2.0 AUDIT METHODOLOGY

The audit was carried out in accordance with the

International Organisation of Supreme Audit Institutions

(INTOSAI) standards and guidelines. The standards

require that the audit is planned in a manner which

ensures that an audit of high quality is carried out in

an economic, efficient and effective way and in a timely

manner.

The study relied upon document review as shown in

Appendix 1, interviews as shown in Appendix 2, and field

inspections to obtain necessary information to answer the

audit questions as detailed in the following sections (2.1-

2.3). Data was collected from key players involved in the

implementation of the Resettlement Action Plan, namely:

Ministry of Lands, Housing and Urban Development

(MLHUD) specifically the Office of the Chief Government

Valuer (CGV), Petroleum Exploration, Development

and Production Department (PEDPD) of the Ministry of

Energy and Mineral Development and Hoima district

Local Government. Also host communities, members of

the district land board, leaders at sub-county and village

levels were interviewed. Village meetings were held with

the PAPs and selected members from the host villages

were also interviewed.

2.1 TIMELINESS AND ADEQUENCY OF CASH COMPENSATION

To determine the extent to which the PAPs entitled to

cash were adequately and timely compensated/paid, the

team reviewed correspondences between the MEMD,

MLHUD and the consultant (SFI). The team also carried

out document reviews of the various legal framework and

guidelines and the Resettlement Action Plan in regard to

timely and adequate compensation.

For timely compensation, the team carried out analysis of

payments with regard to period of valuation and payment.

It also conducted interviews with staff of MEMD and SFI

to establish the extent to which payments were made

promptly and the progress of implementation of the

Resettlement Action Plan.

In addition, the team reviewed the progress reports and

contract documents of the MEMD, SFI and contractors

to determine the extent to which they complied with the

provisions provided for in the Resettlement Action Plan

especially the Implementation schedule. From this,

the team was able to ascertain the activities that were

implemented timely, and where there was deviation from

the plan.

Chapter Two


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Regarding adequacy, the team obtained compensation

rates for Hoima District Land Board (HDLB) for the

period 2010/11-2016/17 and the valuation report and strip

maps by the RAP consultant from MEMD. The team also

reviewed correspondences between the MHLUD, MEMD,

and SFI for the purpose of conceptualising adequacy as

enshrined in the legal framework. It also compared the

compensation rates that were used at valuation with

those in the years when payment was made.

The audit team also conducted field inspections to

ascertain the level of implementation of the RAP,

living conditions and livelihood of the PAPs. During the

inspections, the team held meetings/ interviews with the

various leaders at district, sub-county and village levels.

The team also held meetings with the PAPs and with

the residents of the host communities where the PAPs

migrated to.

2.2 TIMELINESS AND ADEQUACY OF RESETTLEMENT

Interviews were conducted with representatives from

MEMD, contractors and consultants implementing the

resettlement infrastructure projects of Housing Units,

Health Centre and Schools, to assess the progress of

implementation of these projects. Project management

documents like contract agreements, correspondence

files, Procurement files, Consultancy Contract for

provision of consultancy services for design review and

construction supervision of houses and social services

infrastructure in area where people from refinery land

will be resettled, Monthly progress reports, Minutes of

Site meetings, material test results on file, Original and

revised design drawings, change orders and addendums

to the original contracts, were also reviewed to establish

whether PPDA regulations were followed during

procurement, contractual timelines were adhered to,

and assess the extent of Contract management during

implementation of the three projects.

Documents as contract agreements, correspondence

files, Project Specifications, material test results on file,

Monthly Progress reports, Minutes of Site meetings,

original and revised design drawings for the resettlement

infrastructure were reviewed. Field inspections in the

presence of the Client, contractor, and supervising

consultants of the resettlement infrastructure were

carried out to physically verify the quality of the works

executed.

Photographs of construction works at the resettlement

houses, health Centre’s and schools were taken to

provide evidence of the status of construction works.

Non-destructive (Schmidt hammer) tests for ongoing

works were done to ascertain the quality of concrete used

in building the resettlement infrastructure.

2.3 GRIEVANCE-HANDLING MECHANISMS

Specifications of the required grievance-handling

mechanisms were obtained from the RAP. The audit

team interviewed the consultant and scrutinized

documents provided, to ascertain that the mechanisms

were established and in place. Further data collection

was done to determine the extent to which the available

mechanisms fostered successful and expeditious

resolution of grievances.


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Chapter Three


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3.0 SYSTEM AND PROCESS DESCRIPTION

3.1 ROLES AND RESPONSIBILITIES OF KEY PLAYERS IN MANAGEMENT OF PAPs

Ministry of Energy and Mineral Development (MEMD)

As the principal ministry in charge of overseeing all

petroleum activities from the upstream to downstream,

it is required to ensure that all PAPs are well managed.

MEMD is also the implementing agency for the

resettlement infrastructure facilities in respect of

resettlement houses, schools and health centres. It is the

project owner and monitors the progress of the projects.

Petroleum Authority of Uganda (PAU)

As the regulator, PAU is required to ensure that the oil

company and the RAP consultancy firm adhere to the

governing laws, regulations, and best practices pertaining

to compensation.

Petroleum Exploration, Development and Production

Department (PEDPD) They are responsible for the

implementation of the compensation process. It should be

noted that that in the absence of PAU, PEPD was carrying

out PAU’s activities as an institutional arrangement.

Ministry of Lands, Housing and Urban Development

(MLHUD) The Chief Government Valuer under the

department of land administration in MLHUD is required

to provide reliable real property valuations to Government.

This is done through advising Government on the real

property valuation; Valuing Property for purchase and

compensation by Government; and assisting districts to

determine compensation rates; Mediation, adjudication

and litigation on property valuations where necessary;

and carrying out Local Government rating valuations.

Uganda Land Commission (ULC)ULC is in charge of holding and managing any land

acquired by government in accordance with the

constitution13. Additionally, it is supposed to register all

the land acquired under oil and gas activities.

District Land Boards

At the local level, the land management and administration

is vested in the District Land Boards14. With regard to

compensation, DLBs are required to; hold and allocate

land in the district which is not owned by any person

or authority; facilitate the registration and transfer of

interests in land; compile and maintain a list of rates of

compensation payable in respect of crops, buildings of

a nonpermanent nature and any other thing that may

be prescribed15; Review every year the list of rates of

compensation in consultation with the technical officers

in the district.

District Land OfficeThe district land office provides technical services to the

District Land Board as it comes up with the rates.

Strategic Friends International (SFI)SFI is the consultancy firm responsible for developing

and implementing the Resettlement Action Plan (RAP) on

behalf of Ministry of Energy and Mineral Development for

13Resettlement Action Plan 2012, Page 3 14Land Act 1998, Sec.59 http://www.ulii.org/ug/legislation/consolidated-act/22715Land Act 1998, Sec.59 http://www.ulii.org/ug/legislation/consolidated-act/22716SFI website: http://www.sfi.co.ug/#

Chapter Three


10

the acquisition of land for the Oil Refinery16.

Project Affected Persons (PAPs)

These are the people who are to be resettled or

compensated as a result of the project. The constitution

provides for prompt payment of fair and adequate

compensation, prior to the taking of possession or

acquisition of the property17.

Civil works contractors

These are procured on the basis of the evaluation criteria

spelt out in the bid documents for the required works.

They are responsible for execution of all the civil works in

accordance with the drawings and technical specifications

under each of the contracts for resettlement houses,

schools, and Health Centres. They are also responsible for

implementation of the Environmental Impact Assessment

(EIA) in consultation with the supervising consultants.

Civil society Organizations (CSOs)CSOs18 play the roles of advocacy, mobilization, and

dialogue with communities. They contribute to holding

the different players accountable with regard to oil and

gas issues and participate in getting the voices of

the poor into designing, monitoring and implementation

of programmes in the oil and gas sector. Also, they are

contracted to carry out compliance audits.

3.2 PROCESS DESCRIPTION FOR MANAGEMENT AND COMPENSATION OF PAPs

Management and compensation of PAPs comprises the

following key steps:

1. A Government-procured consultant undertakes a

feasibility study to identify and propose suitable land

for the project.

2. Once the land is found suitable, MEMD expresses its

interest in the land to the District Land Board which

in turn requests the Area Land Committees of the

selected area to identify Project Affected Persons

(PAPs). The PAPs work with the consultant to develop

a Resettlement Action Plan (RAP). Cadastral surveys

and strip maps to determine and indicate size and

ownership of land are undertaken/ developed and

displayed at the district and sub-counties of the area

for verification by PAPs.

3. Property permanent in nature (land and buildings) in

urban centres is valued based on open market rates

determined by the consultant during market surveys,

while depreciated replacement costs are used for

rural areas.

4. For property non-permanent in nature, valuation and

proposal of compensation rates should be undertaken

annually by the District Valuer, ratified by the District

Land Board, and forwarded to the Chief Government

Valuer for review and approval. The CGV then forwards

them back to the district for use during the year.

5. Once valuation procedures and compensation rates

are determined, a disclosure exercise is conducted,

in which PAPs are engaged to verify land and

valuation figures. A cut-off date is set, beyond which

further developments on the land are ineligible for

compensation.

6. Sensitization of PAPs on compensation options-

monetary or resettlement- follows.

7. Following agreement between the PAP and the RAP

Implementing Agency (in this case, Strategic Friends

International), compensation should be completed

promptly and prior to commencement of works.

Monetary payments below UGX 100,000 are made in

cash, while those above are effected via cheque or direct

transfer to the PAP’s verified bank account. For PAPs

that opt for resettlement, their needs are discussed

with the ministry, including preferred resettlement

area, design of houses, settlement lay-out, location

17 The Constitution 1995, Article 26(b)(i)18The National Oil and Gas Policy for Uganda, 2008, page 53


11

of farmland, roads, schools, places of worship and

any other social amenities. The settlement should be

designed and constructed promptly and as agreed.

PAPs are then issued titles of ownership for the land,

and possession of houses for those that had them.

8. Grievances are handled first and foremost by the

District Land Tribunal. The RAP encourages mediation

and resort to court only when all other options fail. The

RAP Implementing Agency is required to establish and

provide to each village a Grievance Register with clear

procedures for lodging complaints. Grievances should

be transferred to a grievance database within two days

after receipt and an acknowledgement slip issued to

the complainant. Records should be kept of grievance

resolution meetings, action taken and agreement by

the complainant that the dispute has been resolved.

9. Monitoring should be conducted monthly and quarterly

by the RAP Implementing Agency. MEMD should also

appoint an external consultant to conduct monitoring

and evaluation of the exercise.

10. The RAP also requires that an NGO be procured

by government to quarterly compliance audits and

a final one 6 months after completion of the RAP

implementation process.

A graphical illustration of the entire process is presented

below:

Figure 1: Process description for management and compensation of PAPs


12

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Fo

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Chapter F


13

4.0 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

This section contains the major findings, conclusions and recommendations from the audit.

4.1 OVERVIEW OF THE PROGRESS OF RAP IMPLEMENTATION

According to Annex 1 of the Resettlement Action Plan (RAP) and its implementation contract19 , the implementation of

the RAP was expected to end within a period of eight (8) calendar months from the contract date. The contract was

signed on 13th June 2013 and therefore its implementation should have ended by 13th February 2014.

The audit team noted through a review of contracts that there were significant delays in implementation of the RAP,

ranging from 20 months to over 4 years. Details of the progress are laid out in Table 2 below:

19Contract for the Provision of Consultancy services to Implement the Resettlement Action Plan for the Oil Refinery Land in Kabaale, Buseruka Sub county, Hoima District June 2013, page 30 signed between MEMD and SFI

Expected Deliverable /

milestone

Plan as per RAP

(months)Actual Comments/ statusVariance

Procuring services of a witness NGO to undertake compliance audit activities

Procure monitoring and evaluation consultant

Organizing and holding RAP mediation committee meetings / grievance handling

July 2013 Still pending N/A Not done

September – December 2013

September 2013 – January 2014

November 2013 – August 2015

Ongoing 4 years

20 months

There are unresolved grievances

Signing of compensation agreements started in 2013 till 2015

Reviewing and signing compensation agreements with affected persons/households

July 2013 June 2017 4 years Procured in June 2017

Source: OAG Analysis

As seen in the table, whereas the monitoring and evaluation

activities were supposed to be continuous from inception,

the consultant was procured in June 2017. Similarly, the

livelihood restoration programme which should have

been implemented by September 2013 was started in

August 2017. Additionally, the procurement of an NGO to

carry out compliance audits on the implementation of the

RAP had not started by the time of audit (November 2017).

According to MEMD, the delay of the RAP implementation

was caused by some PAPs contesting the compensation

rates; handling of grievances some of which resulted in

supplementary valuation reports requiring the approval

Chapter Four

Table 2: Progress of RAP Implementation


14

of the CGV; disruptive activities of some NGOs who

continuously mobilized PAPs to shun the compensation

exercise; absentee PAPs who have never turned up for

discussions; delayed release of compensation funds and

delayed procurement of the consultant to implement the

RAP process.

The audit team noted that while the causes outlined by

the ministry could explain the delays in actual payment

of the PAPs, they do not explain delays to implement

key activities of the RAP as highlighted in Table 3. In

addition, the delay in/non procurement of consultants to

implement RAP related activities would not have arisen

given that timely implementation of RAP related activities

formed the basis for undertaking direct procurement

of the consultant under a waiver granted by PPDA.

Furthermore, Management did not provide evidence of

untimely release of funds.

The Audit team attributed the noted delays to weaknesses

in project implementation by MEMD. This is exemplified

by failure to prioritise the implementation of key project

milestones such as monitoring and evaluation and

compliance audits.

The immediate effect of delayed implementation of the

RAP is that it necessitated extending the contract duration

five times and increased the cost of the consultancy

services by UGX 1, 239,760,000 according to contract

reference MEMD/CONS/14-15/00210/PEPD.

Table 3 shows the contract extensions and additional

costs.

Also, the above delays denied the PAPs the intended

benefit of prompt and fair compensation.

Management Response

The UGX 1,239,760,000 indicated in the audit report as

an additional cost incurred is as a result of a balance

from the first contract for unimplemented activities and increase in the scope.

Source: OAG analysis of contracts

Contract Reference Duration Contract sum Comment

13/06/2013 - 13/02/2014 3,741,343,400

Amendment 1 15/02/2014 - 13/06/2014 Time extension

18/02/2015 - 18/02/2016 1,239,760,000

Amendment 1 18/02/2016- 15/08/2016 Time extension



MEMD/ SRVCS/ 12- 13/

00309/ PEPD

MEMD/ CONS/ 14- 15/ 00210/

PEPD

New contract to

complete the work

Audit Comment

The details of the increase in the scope of the work to

justify the new contract were not availed for verification.

Recommendation

MEMD should ensure that project planned key activities

are prioritized, closely supervised and monitored to

ensure that project deliverables are achieved as planned.

This will also minimise cost overruns.

Table 3: Contract details of SFI

Source: OAG analysis of contracts


15

4.2 TIMELINESS AND ADEQUACY OF CASH COMPENSATION TO PAPs

4.2.1 Timeliness

Section 73(3) of the Land Act Cap 227 requires prompt

payment of compensation to any person having an interest

in the land for any damage caused to crops or buildings

and for the land and materials taken or used for the works.

Whereas the Act does not explicitly define promptness,

the RAP implementation schedule prescribed the

timeframe within which the cash compensations should

have been undertaken (four months after signing of the

implementation contract that is November, 2013).

A review of the cash compensation status report as at 7th

December, 2016 revealed that 2,680 PAPs were eligible

for cash compensation. Out of the 2,680 PAPs, 2,657

had been paid by the time of audit (November, 2017)

representing 99%.

However, analysis of the payment files provided by

management, revealed that out of the 2,657 PAPs, only

104 (representing 4%) were paid within the prescribed

timeframe as shown in Figure 2 below:

No delay Delay

Figure 2 shows that there were delays to compensate

2,553 (96%) of PAPs, with these ranging from less than 6

months to over 2 years.

The management of MEMD explained that the delays in

the payments of the PAPs were caused by the delays in

the disclosure exercise as a result of the slow turn up

of the PAPs for the exercise and interference by Non-

Government Organisations (NGOs).

Further still, through focus group discussions20 and

review of a sample of twenty four (24) payments, the audit

team noted that SFI issued payment receipts to all the

PAPs prior to actual payment of the cash. The format of

the payment receipt required that the PAP acknowledges

receipt of the funds before actual payment as shown in

Table 4 below;

Figure 2: Time taken to compensate PAPs

20 In villages of Kitegwa; Nyahaira; Kyapaloni; Nyakabingo and Nyamasoga


16

Table 4: Payment Receipt date vs. Actual Payment date

Serial No Area Of Location Payment Receipt Date Date Of Actual Payment Compensation Amount

HORNYAH054 Nyahaira 19/01/2015 29/04/15 312,000

HORKAY051 Kayera 5/6/2015 30/07/15 196,563,712

HORBKB250 Bukona B 24/05/2015 19/10/15 112,535,670

HORKYP317 Kyapaloni 18/01/2015 19/10/15 108,146,090

HORNYAH059 Nyahaira 11/8/2015 19/10/15 14,004,003






HORKYP126 Kyapaloni 11/8/2015 19/10/15 32,733,253

HORBKB352 Bukona B 11/11/2015 11/01/16 49,125,700

HORBKB113 Bukona B 11/11/2015 11/01/16 29,562,130



HORKYAP096 Kyapaloni 13/01/15 11/01/16 24,726,650

HORKYAP071 Kyapaloni 5/11/2016 12/01/17 780,000







HORNYAK049 Nyakasinini 4/11/2016 12/01/17 15,856,867

Source: OAG analysis of PAPs’ payments


17

21 Write-up from Ministry of Lands, Housing and Urban Development,201522Land and buildings permanent in nature23Approved methodology

MEMD explained that this was done to mitigate the risk

of PAPs vacating land before acknowledging receipt of

payment to their bank accounts.

News that PAPs had signed for payment triggered

speculation in the neighbouring villages where these

PAPs planned to re-settle thereby increasing the cost of

land. Interviews with the PAPs who resettled in the areas

of Nyakabingo, Nyakasinini, Nyamasoga and Chunga-

Jembe revealed that by the time they received their

money, the price of land in neighbouring villages had

increased thereby making it difficult for them to acquire

equivalent size of land. This has made it challenging for

the PAPs to continue with their livelihood of cultivation

since it formed about 90% of their livelihood.

Management Response

Management has noted the observation made by the

Auditors. The delay to compensate PAPs was as a result

of delay in the disclosure exercise and interference by

NGOs. Once these were rectified we were able to pay the 1st batch of 104 PAPs (4%) and once the payments started

in November, 2013 the process continued steadily and

to date all the PAPs who signed for compensation have

been paid.

Audit Comment

Whereas MEMD submitted that there was a delay in

the disclosure exercise, there was no evidence in form

of plans and duration of the execution of the activity to

ascertain the delay. Therefore, MEMD did not explain the

cause of delays in actual disbursement of the funds to the

PAPs. Further, although compensation for land inevitably

results in hikes in the price of land in neighbouring

villages, delayed actual payment affects the size of the land a PAP could have purchased in case of prompt

payment. In addition, the practice of signing for payment

before receipt is not right in principle given the changing

time value of money and the fact that it becomes difficult to ascertain the PAPs that have received their payments.

Recommendation

In the subsequent projects, MEMD should ensure the

following:

• Comprehensive planning is done, including

sensitization of the PAPs and the involvement of NGOs,

so as to quicken the disclosure exercise.

• The RAP consultant adheres to compensation

guidelines for purposes of fairness. Cases as shown in

Table 4 above should be profiled so as to ensure timely

payment to avoid speculation.

4.2.2 Adequacy

In the context of this audit, adequacy refers to the

application of the most appropriate rates and payments

of the right amounts to bona fide affected persons.

4.2.2.1 Formulation of Rates

a) Property Permanent in nature

Article 26(b) (i) of the Constitution requires government

to provide adequate compensation prior to the taking

of possession or acquisition of property. In addition, the

Minister responsible for Lands appointed the CGV as a

sworn valuer for this purpose21. Therefore one of the CGV’s

duties is to value property for purchase and compensation

by government. This practice requires the CGV to provide

the rates for property permanent22 in nature or supervise

a private valuer appointed by the acquiring government

agency.

Through document review23 and interviews with the CGV,

the audit team noted that the CGV approved the valuation

methodology submitted by SFI which highlighted the

procedures that would be used for valuation of property

permanent in nature. It was further noted that the

methodology provided that customary land was to be

assessed at approximately 90% of the market value of the

registered land.


18

25 1995 Constitution of the Republic of Uganda; Article 26(2)(b)(i)26Correspondence VAL/37/42/01 on January 9, 2013; from CGV to Permanent Secretary MEMD; CLARIFICATION ON VALIDITY OF COMPENSATION VALUES

The audit team noted 5 villages (Nyamasoga and

Nyahaira, Bukoona A, Katooke and Kayera) where the

approved methodology was not followed during the

Value of registered land per acre(A)UGX

Villages Value at 90% for customary land (B) UGX

Actual paid for customary land per acre (C) UGX

Variance(C-B) UGX

Acreage of customary land

Amount UGX

Value of registered land per acre(A)UGX

Villages Value at 90% for customary land (B) UGX

Actual paid for customary land per acre (C) UGX

Variance(C-B) UGX

Acreage of customary land

Amount UGX

valuation of customary land as shown in the Table 5 and

Table 6 below. The tables show variance between the

value as per methodology and actual rate paid.

Table 5: Overvaluation of customary land

Nyamasoga 4,700,000 4,230,000 4,500,000 270,000 723.7 195,399,000

Nyahaira 4,900,000 4,410,000 4,500,000 90,000 1115.02 100,351,800

Total 295,750,800

Source: OAG analysis of the valuation repor t; the str ip maps and methodology for compensation valuation

Table 6: Undervaluation of customary land

Bukoona A 3,900,000 3,510,000 3,500,000 (10,000) 879.76 (8,797,600)

Katooke 4,000,000 3,600,000 3,500,000 (100,000) 43.02 (4,302,000)

Kayera 3,900,000 3,510,000 3,500,000 (10,000) 307.25 (3,072,500)

Total (16,172,100)

Source: OAG analysis of the valuation repor t; the str ip maps and methodology for compensation valuation

From the Table 5 above, the rates in the villages of

Nyamasoga and Nyahaira were higher than the 90%

value of the registered land considered for compensation.

For example in Nyamasoga the expected rate as per

methodology would have been UGX 4,230,000; however,

UGX 4,500,000 was considered creating a variance

of UGX 270,000 per acre representing a total loss of

UGX 295,750,800 to government from Nyamasoga and

Nyahaira.

On the other hand, Table 6 shows that the rates used

for Kayeera, Katooke and Bukoona A were lower than

the 90% value of the registered land considered for

compensation. Consequently this resulted in a total loss

of UGX 16, 172,100 to the PAPs.

The consultant explained that the circumstances at

planning differed from what was found on ground which

necessitated adjustment of the rates. Audit expected

the consultant to write to the CGV explaining the

circumstances and seek approval for the adjusted rates.

However, there was no evidence that this had been done.

The audit team attributed the above anomalies to the

inadequate supervision of the consultant by the CGV as

he did not provide any supervision reports in regard to

application of the methodology.

Consequently, the value of customary land was

overvalued in two (2) villages and undervalued in three (3)

which resulted in a loss to government and to the PAPs,

respectively, as shown in Table 5 and Table 6; it also

resulted in the PAPs in Kitegwa being disadvantaged.


19

Management Response

Management has noted the observation made by the

auditors. The proposal in the methodology of the value

of customary land being approximately 90% of registered

land was meant to act as a benchmark but the actual

cost of land had to eventually be derived from the market

survey based on comparative market transactions

conducted during the RAP study and this was the basis

for compensation.

The established market value was the basis of the

valuation reports supervised, verified and approved by the CGV.

Audit Comment

The audit team acknowledges management’s submission;

however, the valuation methodology submitted by SFI to

the CGV for approval was derived after carrying out a

market survey based on comparative market transactions

conducted during the RAP study and was meant to be

the basis for compensation and not to act as a bench

mark. This was eventually approved by the CGV and SFI

was expected to adhere to the approved methodology.

However, evidence of approval for the adjusted rates used

by the consultant during the valuation exercise was not

provided for verification.

Recommendation

The CGV should closely supervise and monitor the

valuation exercise for future compensation projects

and ensure that the approved valuation methodology is

adhered to by the implementing entity/consultant.

Similarly, where circumstances may require deviation

from the approved methodology, the CGV should ensure

that the amendments are approved before they are

applied for valuation. This will not only avoid discontent

amongst PAPs but also would save government money

allocated to specific compensations.

b) Property Non-Permanent in nature

It is a requirement under the Land Act, Sec. 59(1) that

for each district, the District Land Board (DLB) should

compile and maintain a list of rates for compensation

payable in respect of crops, buildings of non-permanent

nature and any other thing prescribed by law and also

review every year the list of rates of compensation. These

rates are required to be reviewed and approved by the

Chief Government Valuer, and should form the basis of

compensation. Use of up-to-date rates is therefore key to

ensuring the adequacy of compensation.

The audit team noted that although compensation started

in FY 2013/14, the rates used for almost all PAPs were

obsolete as they were for 2011/2012 and even these had not

been approved by the CGV. The CGV also did not approve

the rates submitted by the HDLB between 2013/14 and

2015/16, as shown in Table 7.

Table 7: Delays in approval of submission rates

Financial Year Approved by HDLB Submission to CGV Status of Approval by CGV

2010/11 1/10/2010 6/10/2010 Approved 15/11/2011

2011/12 13/10/2011 15/06/2012 Not Approved

2012/13 28/02/2013 Not Submitted Not Approved

2013/14 19/12/2013 7/04/2014 Not Approved

2014/15 29/05/2015 22/06/2015 Not Approved

2015/16 17/03/2016 20/04/2016 Not Approved

2016/17 17/03/2016 28/03/2016 Approved(28/04/2016)

Source: OAG Analysis of CGV and HDLB cor respondences


20

The audit team attributed delays in approving submitted

compensation rates to late submissions by the District

Land Boards. For instance, the proposed rates for 2013/14,

2014/15 and 2015/16 were submitted to the CGV 9, 12 and 9

months into the years in which they were supposed to be

applied. Those for 2011/12 were submitted 6 months into

the year, while those for 2012/13 were not submitted at all.

During interview, the CGV indicated that the proposed

rates should preferably be received from the DLBs four

months before commencement of the new financial year

to ensure they are approved in time for the New Year.

However, it is also noted that during the entire period, the

CGV did not communicate the reasons for non-approval

to the HDLB and did not guide them on the timeframe

within which to submit in order to ensure timely approval.

Application of inappropriate rates during the years of

payment resulted in the PAPs receiving low compensation

value for their property. Consequently, some PAPs,

especially in Kyapaloni and Kitegwa, contested the

rates on grounds that they were out-dated and low and

therefore they did not sign for their compensation worth

UGX 446, 602,274 as shown in the Table 8 below;

Table 8: PAPs that declined to sign due to low rates

SN Serial Number for PAPs Amount assessed as compensation (UGX)

1 HORBKB281 1,524,640

2 HORKAB1001 113,860,240

3 HORKIT007 7,816,380

4 HORKIT013 35,282,260

5 HORKIT011 17,745,000

6 HORKIT044 118,555,938

7 HORKIT061 113,100

8 HORKIT062 34,400

9 HORKIT066 622,700

10 HORKIT073 8,693,971

11 HORKIT092 897,416

12 HORKIT093 397,220

13 HORKIT108 17,626,700

14 HORKIT119 9,088,295

15 HORKIT068 10,903,230

16 HORKIT054 7,399,600

17 HORKIT075 3,544,060

18 HORKIT129 42,868,088

19 HORKYAP293 9,660,250

20 HORKYAP077 10,683,010

21 HORKYAP448 2,047,500

22 HORKYAP603 1,132,300


21

23 HORNYAH435 8,365,500

24 HORNYAH837 94,9000

25 HORNYAK047 16,791,476

TOTAL 446,602,274

Management Response

Management has noted the auditor’s observation.

The rates of 2011/12 were the applicable rates at the time of the RAP study and accordingly they were the rates

applied. The Compensation rates applied in the principal

report were moderated and approved by this office.As already observed the disclosure and compensation

process commenced in July, 2013 and continued steadily

until all the PAPs who had signed for compensation were

paid. The few PAPs who have not yet been paid are those

who have not yet signed and are still being engaged.

Audit Comment

The team acknowledges CGV’s response. However, of

the rates provided, only those for 2016/17 and 2010/11 were approved; the ones for 2011/12 that were used for compensation were not approved. Furthermore, whereas

the 2011/2012 rates that were used were applicable at the time of the RAP study, they were obsolete by the time of

payment and required revision as also noted by the CGV in earlier correspondences with MEMD.

Recommendation

• MEMD should endeavour to liaise with the CGV to

ensure that the rates used to compensate PAPs are

the prevailing rates in the year of payment in order to

minimise disputes with PAPs.

• The CGV should guide DLBs on when they should submit

proposed rates in order to ensure timely approval. In

case of non-approval, the CGV should communicate

their reasons to the DLB.

4.2.2.2 Uniformity of rates

In accordance with section 77(3) of the Land Act, the rates

set out in the list of rates of compensation referred to

in section 59(1)(e)24 should be used in determining the

amount of compensation payable.

However, through review of the valuation report and

payment files, it was noted that the rates, despite being of

the same year, were not applied uniformly to the affected

villages in Buseruka sub-county. A random sample of forty

four (44) PAPs from the four (4) villages of Nyamasoga,

Kyapaloni, Kitegwa, and Nyahaira out of the thirteen (13)

villages indicated that nineteen (19) PAPs, representing

43.2%, had their crops valued at rates different from the

recommended rates by the district land board as detailed

in Appendix 3.

For example, in Nyahaira village, PAPs HORNYAH585;

HORNYA814 and HORNYA586 had their rate of an acre

of medium cassava valued at a rate of UGX 2,500,000 as

compared to the PAPs HORNYAM002 and HORNYAM012

in Nyamasoga who were given a rate of UGX 520,000

under the same category.

Additionally, PAP HORKAT015 from Katooke village had

been valued at UGX 99,678,082 without including the

28,000 pine trees and 23,200 eucalyptus trees which were

on his land worth 20.83 acres. The audit team noted that

a supplementary valuation was undertaken in which the

trees were valued at a total of UGX1, 221,988,128. It was,

however, established through review of a technical report

from the Ministry of Water and Environment that the

24 Sec.59(1)(e) Functions of the Board; To compile and maintain a list of rates of compensation payable inrespect of crops, buildings of a non-permanent nature and any other thing that may be prescribed;

Source: OAG analysis of Cash Compensation Status Repor t December , 2016


22

value of compensation was arrived at using discounted

cash flows (Net Present Value) instead of using district

compensation rates which were applied to the rest of the

PAPs.

Audit attributed this anomaly to the inadequacy of the

rates that were compiled by HDLB. For instance the

category of crops and trees at medium stage of growth,

such as: cassava, beans, ground nuts, rice, red pepper,

maize, neem tree, Ulu tree and Oduk tree were not

provided for on the schedule of compensation rates.

Consequently, this presented an opportunity for the

consultant to set rates at own discretion which could

have resulted in over or under payments arising from the

irregular valuations.

Management Response

Management has noted the Auditors’ observation:

The Hoima District Land Board did not have rates for

some of the medium category crops and the consultant

valuers had to professionally and pragmatically make

an assessment benchmarked on the approved rates for

young and old crops and also taking into consideration

the quality, spacing and maintenance of the crops.At the point of valuation, some of the trees of PAP

HORKAT015 were classified by the valuers as seedlings by virtue of their size and were therefore assessed on that basis. The PAP however contested the classification and valuation and the matter was referred to the DFO

of Hoima who advised that the trees were young and

medium and not seedling hence the initial revaluation.

The Ministry further sought guidance from the CGV on

how to handle compensation for the PAP and the CGV in

turn sought a technical input from the Ministry of Water

and Environment, which carried out a valuation of the

trees and submitted a report to CGV on the basis of which

the CGV advised the Ministry on the compensation.

Audit Comment

A letter from the DFO of Hoima advising that the trees

were young and medium and not seedling hence the

initial revaluation was not availed for audit verification. Furthermore, a letter from the CGV advising the Ministry

on the compensation was also not availed for audit

verification.The interventions that were adopted by the consultant

notwithstanding, management should have ensured that

the rates were consistently applied in the medium category

as was done for the mature and young categories.

Recommendation

MEMD should liaise with the CGV to ensure that the rates

submitted by HDLB are comprehensive to equitably/

adequately cater for all categories of property of non-

permanent nature before approval. In cases where

compensation rates are determined at the discretion of

MEMD/consultant, they should be in consultation with

the CGV and should be applied uniformly.

4.2.3 Appropriateness of Rates

Article 26(2) (b) (i) of the Constitution provides for

payment of fair and adequate compensation, prior to the

taking of possession or acquisition of the property25. This

is expounded by correspondence from the CGV26 to the

Permanent Secretary, MEMD in which he stated that the

district compensation rates were updated annually to

reflect market prices and as such advised that the MEMD

compensated PAPs by June 30, 2013.

However, review of the payment files provided by the

MEMD revealed that payments started in November, 2013

and were still underway by the time of audit (November,

2017) as indicated in the Table 9 below;

25 1995 Constitution of the Republic of Uganda; Article 26(2)(b)(i)26Correspondence VAL/37/42/01 on January 9, 2013; from CGV to Permanent Secretary MEMD; CLARIFICATION ON VALIDITY OF COMPENSATION VALUES


23

Table 9: Payments per Financial Year under review

Financial year No of PAPspaid Amount paid

2013/14 1,387 25,797,390,277

2014/15 1,080 22,340,674,662

2015/16 164 3,945,104,922

2016/17 26 2,818,577,188

Grand Total 2,657 54,901,747,049

Source: OAG analysis of payment fil es

PAPs paid that year; apart from PAPs HORNYAM079 and

HORNYAK025 who had their rates for both crops and land

revalued by SFI to reflect the 2016/17 rates. This arose

from the submission made by MEMD to the CGV who

gave a go ahead to re-evaluate the two PAPs in question.

Consequently, their total payments increased from UGX

1.029 billion and UGX 74,222,200 to UGX 2.220 billion and

UGX 189,250,750, respectively.

Given fairness as a fundamental principle for

compensation, then all PAPs who were paid in 2016/17

would have been paid using the rates of 2016/2017.

However, from a sample of twelve (12) PAPs out of the

twenty-six (26) that were paid during FY2016/17, only two

PAPs were compensated based on 2016/17 rates after

applying for re-evaluation. These rates were, however,

not applied to the other PAPs who received compensation

payments that same year as shown in Table 10 below;

Table 10: Actual versus would-be payment during FY 2016/17

HORNYAH217 10,792,158 10,792,158 15,751,450 4,959,292

HORNYAH208 21,060,000 21,060,000 28,080,000 7,020,000

HORNYAH854 44,310,760 44,310,760 63,267,360 18,956,600

HORNYAH656 3,984,500 3,984,500 4,966,000 981,500

HORNYAM079 1,028,435,534 2,220,014,732 2,220,014,732 0

HORNYAH259 14,696,058 14,696,058 20,490,652 5,794,594

HORNYAH080 67,085,329.95 67,085,329.95 90,050,831 22,965,501

HORNYAK025 74,222,200 189,250,750 189,250,750 0

HORNYAK049 15,856,477 15,856,477 30,414,657 14,558,180

HORKYAP510 1,867,476 1,867,476 2,870,660.0 1,003,184

HORKYAP077 10,683,010 10,683,010 13,342,420 2,659,410

HORBKA088 8,190,000 8,190,000 14,040,000 5,850,000

Total 198,525,769 2,607,791,250.97 2,692,539,512 84,748,261

Serial No of PAP Compensation value

(2012/13)Actual payment

(2016/17) (UGX) (A)Would-be payment

(2016/17) (UGX) (B)Difference UGX (B-A)

Source: OAG analysis of payment fil es and valuation repor t

Whereas the payments were not made in the period

advised by the CGV, MEMD did not make efforts to adjust

the values to cater for the market price adjustments in

the various years of payment. Even for the year 2016/17

where the rates for crops and buildings non-permanent

in nature were approved; the rates were not applied to the


24

From the Table 10 above, the sampled PAPs would have

been paid UGX 2,692,539,512 in total as compared to UGX

2,607,791,250.97 that was paid hence a difference of UGX

84,748,261. This difference resulted from the fact that

out of the 12 PAPs, only two were paid basing on updated

rates of 2016/17, the remaining ten (10) were paid using

the 2012/13 rates.

According to the MEMD/SFI, the justification for the

revaluation was based on the principle of payment of fair

and adequate compensation prior to taking over of the

land as enshrined in the constitution. However, the audit

team found the explanation unsatisfactory because it was

applied selectively and not to all PAPs that were paid in

the same year 2016/17.

An interaction with PAPs in seven villages27 visited

revealed that this has left PAPs dissatisfied.

Management Response

Management notes the observations of the auditors.

Compensation is a continuous process that needs to

be handled very well and as such once the process has

commenced it may not be practical to keep revising the

rates as this would even cause more delays and even

incentivize some of the land owners to delay signing for approved compensation in anticipation of higher rates in

the future.

The two PAPs whose compensation was reviewed lodged

complaints and the re-assessment was based on the technical advice of the CGV. The compensation for the

other PAPs was not reviewed because they had already

signed for their compensation and the Ministry was

processing payment.

Audit Comment

Whereas compensation is a continuous process, the

principle of fair and adequate compensation as enshrined in the constitution and the Land Act should prevail. As

such, revision of the compensation values should be

based on the prevailing rates (in this case 2016/2017) without PAPs having to first lodge complaints. Updating values for only two PAPs out of the 26 implies selective

application of the updated rates.

Recommendation

The MEMD in collaboration with the CGV should always

ensure that compensation values are adjusted annually to

reflect annual market prices. In addition, MEMD in liaison

with the CGV, should ensure that in future compensation

projects, the RAP consultant applies the adjusted rates

uniformly to all PAPs to ensure fairness and adequacy in

compensation.

4.3 TIMELINESS AND ADEQUACY OF RESETTLEMENT

4.3.1 Timeliness of Resettlement

According to the inception report for Consultancy

services to implement the RAP of June, 2013 the activity

of sourcing for resettlement and farm land for the PAPs

that opted for resettlement was supposed to commence in

September 2013. Similarly, the construction of the houses

for the PAPs and other resettlement infrastructure such

as schools, health centres was supposed to start in

October and November 2013.

A review of contract documents and the inception report

showed that there were delays in starting and completing

the above activities, as shown in Table 11;

27 Nyamasoga, Nyahaira, Nyakabingo, Nyahaira, Kyapaloni, Chunga Jembe and kyakaboga


25

Table 11: Planned and actual completion dates as per inception report and contracts

Interviews with MEMD officials indicated that the two-

year delay to begin the construction of the planned

resettlement houses, schools and health centres, was

occasioned by the increase of the PAPs to be relocated

from 27 PAPs to 93 PAPs.

Furthermore, the table shows that initial delays

notwithstanding, even after identifying contractors to carry

Name of Contractor

Construction of 46

three bedroomed

residential houses,

with detached

kitchen room and pit

latrine in Kyakaboga

Construction of

two new schools,

an administration

block, 2 no.

teachers’ houses,

VIP latrine blocks

and renovation of

buseruka P/S.

Improvement

and expansion

of infrastructure

for Kabaale and

buseruka health

centre III’s in

buseruka sub-county

13/10/2013 30/10/2015 30/06/2016 05/08/2017

13/11/2013 8/12/2015 8/11/2016 13/04/2017

13/11/2013 9/12/2015 09/08/2016

M/s Sumadhura

Technologies

Build Base

Contractor’s

Limited

M/S Trans Action

International

limited

Project name/ Activity A

Expected start date as per Inception report

Contract Commencement date

Expected completion date as per contract

ActualCompletion Date

Not yet completed

SFI Purchase of land 13/09/2013 August 2014

out the infrastructural works, there were delays in the

completion of the works. At the time of audit (November,

2017), construction of schools was incomplete, and the

contractor was not on site while the health centre IIIs

and resettlement houses delayed by about 8 months and

13 months, respectively. The causes of the delays are

summarised in the Table 12 below:

Source: OAG analysis of the Activity plan in the Inception Repor t, signed contracts and field inspections


26

Table 12: summary of causes of the delays

Health Centres

• Delays by Ministry of Health to grant approval for

medical equipment to be installed in the facilities.

• Delays in issuing drawings/information for the fence

and walkways of Kabaale, and Buseruka Health Centres

owing to boundary disputes.

• The Accounting officer should ensure better

coordination with any of the line Ministries

involved in future projects in respect of approvals

of designs for health facilities and opening

of boundaries where boundary disputes are

impeding project implementation.

• Delayed payments to the Contractors with IPCs 6, and 7 still

unpaid for Buildbase, IPC 8 for Transaction International Ltd,

5 and 6 for Sumadhura.

• Delayed handover of staff houses for remodelling to the

contractor by the client. Management explained that doing

so would paralyse service delivery since no provisions were

made for temporary buildings to house the facilities. The initial

scope involved building new staff houses and not renovating

the existing ones.

• Omission of electrical and mechanical works during the

planning phase for the 46 houses. These were included

following a meeting between the Hon. Minister of State

for Minerals and PAPs, and a contract variation worth UGX

576,539,179 for electrical and plumbing works, and extensions

of the contract completion date from 30th September 2016 to

30th December 2016, 30th January 2017, and finally, 28th July

2017.

The Accounting Officer should ensure that:

• Payments are effected as per terms in the

signed contract as any delay in effecting

payments affects the contractor’s cash flows

and subsequently the progress of works.

• Better planning for any future projects in

respect of delayed site possession by the

contractor• A proper needs assessment

is undertaken before major works are

procured in respect of the omitted electrical

works.

Causes of delays to complete construction and/or renovation of:

Recommendations

The 46 housing facilities

Schools

• Poor Accessibility to site (Kyapaloni)- Unavailability of

essential Construction material (aggregates)

The Ministry should in future carry out:

• Better planning for any future projects in respect

of delayed site possession by the contractor

• Adequate planning and thorough review

of design documents before approval and

implementation. This would enable any major

omissions to be noted and included at an earlier

stage for better planning.


27

In addition, the audit team established that although

the houses had been handed over in August 2017,

the individual land titles for both land for houses and

farmland had not yet been processed by the time of audit

inspection (November 2017). The land titles would give

the PAPs legal ownership.

In absence of land titles, the PAPs are deprived of

security of tenure and the benefits that accrue from land

ownership, such as, collateral.

Also, through field inspections and interviews with MEMD,

the audit team observed that other livelihood-related

infrastructure, such as: Kyakaboga police station, Access

road within Kyakaboga resettlement areas, St. Francis

Roman Catholic Church at Nyakasinini and Wambabya

Parish Church of Uganda had not been constructed/

reconstructed.

The delayed construction of infrastructure contributed to

the delayed resettlement of the PAPs and deprivation of

other entitlements under the livelihood programme. Even

after handing over the houses, the audit team observed

through field inspections at Kyakaboga that only 4 PAPs

out of 46 had occupied the houses by the time of audit

(November, 2017).

Also, through village meetings with the PAPs in

Kyapaloni and Nyahaira and physical inspections, the

delay had affected service delivery; for example, the

education system, since children could no longer go

to school in absence of schools but rather resorted to

charcoal burning. Further, the water sources had been

contaminated as shown in Figure 3 as a result of non-

maintenance because the area had been abandoned.

This has exposed them to waterborne diseases such as

Bilharzia.

Figure 3: A silted water source at Kyapaloni village

28

Auditor General’s report December 2017

Timely resettlement of the PAPs would help in timely

restoration of their livelihood.

Management Response

Management notes the auditor’s observation:

The procurement of the contractors to construct the police

post and churches will be concluded by the end of 2017.

The designs of the commercial and community centres

are being developed by the District Engineers of Hoima.

This will be followed by procurement of contractors to

construct the centres.

Preliminary work was done on the access road from the

Hoima - Kaiso Tonya road to the resettlement site which is now fully accessible. The Ministry of Works and Transport

is preparing detailed designs for the construction of

additional roads within the resettlement areas and once

the designs are completed and approved, a contractor

will be procured to construct the roads.

The Ministry acquired two land titles. This land was subdivided into individual PAPs plots. The Ministry

applied to HDLB and physical planning committee

to amalgamate the two titles (since some plots were

crossing the two land titles).

The High Court in Masindi issued a Court Order putting an

injunction on processing of land titles in Bunyoro (seven

districts) including Hoima. However, this Court injunction

has now been lifted and the process of acquiring the individual titles has resumed.

Recommendation

The MEMD should ensure that procurement of the

contractors is planned and undertaken within a

reasonable time. In addition, the ministry should ensure

that contractors are paid on time so that infrastructural

works are undertaken and completed as planned.

4.3.2 Adequacy of the Resettlement

4.3.2.1 Quality of works for resettlement infrastructure for Project Affected Persons (PAPs)

The contracts for the implementation of the resettlement

infrastructure were all structured with M/S New Plan

Limited as the consultant to supervise all works relating

to the resettlement houses, health centres and schools

and ensure that these works were executed as per the

approved designs and contract specifications. These

contracts detailed the quality and quantity requirements

for the civil works to be executed.

i. Visual assessment of quality of works

Based on visual assessment during the inspections

undertaken in November 2017, the quality of works of the

resettlement infrastructure such as health centres, 46

resettlement houses, and the schools was acceptable;

however, there were instances of poor workmanship,

mainly on the schools. For example: the concrete tank

bases had failed, cracks were noted on some floors, tie

beams for the trusses were failing, poor alignment of

precast slabs, other minor defects as evidenced in the

photos taken during inspection as shown in Figure 4

below.


29

Figure 4: Quality aspects/ defects and poor workmanship on implemented infrastructure

a) School facilities (Nyahaira, Kyapaloni, and Buseruka)

Failed water tank bases. Incorrect alignment of the precast slabs

Cracks on the water tank bases Poor jointing between skirting and apron

Missing Window shutter at Buseruka

P/S.

Unroofed Section at Buseruka P/S


30

b) 46 Resettlement Houses at Kyakaboga

Leakage observed in some ceilings Down pipe outlet on splash apron causing water damage

on splash apron on all buildings

Peeling paint on majority of walls and fascia

boards

Cracks in splash aprons, apron repair works and slabs in

majority of houses

Cracked putty and poor finishing on all

windows

Defective solid core flush doors (warping, poorly fixed locks)


31

Missing gutter on the OPD in Buseruka health

centre

Poor workmanship in Buseruka health centre

Cracks on the OPD veranda in Buseruka

health centre, also observed on the Laboratory

slabs.

Paint peeling off in Buseruka health centre, also observed

at Kabaale health centre

The quality deficiencies were attributed to poor

workmanship exhibited by the contractors and lapses in

contract supervision during execution.

Management Response

The defects have been captured and the contractor will be

notified to rectify before handover for the school projects, and within the defects liability period for the houses and

health centres. If not corrected, repairs will be done

by the ministry and the recovery will be made from the

retention amount.

Audit comment

Under Clause 3 of the works contracts for all the three

contractors, the Contractors Covenanted with the

Employer to execute and complete the works, and remedy

any defects therein in conformity in all respects with the

provisions of the contract; MEMD is advised to follow up

rectification of the observed defects.

Recommendation

The Accounting Officer should ensure that:

• Defects are remedied before hand over for the schools,

and expiry of the defects liability period for the 46

houses and health centres.

• The Ministry Strengthens the supervision and

monitoring capacity for works to ensure adherence to

agreed quality standards during contract execution

c) Kabaale, and Buseruka Health centres

32

ii. Structural integrity of the resettlement

infrastructure (resettlement houses, health centres

and schools)

According to MEMD requirements, the three contractors

building the resettlement infrastructure were required to

ensure that the quality of the materials used in building

the resettlement infrastructure met the desired quality

The quality of the materials used had to be reviewed and

approved by the consultant M/S New Plan Limited for the

three projects (resettlement houses, health centres and

schools).

The audit team found that as required during supervision

and project management, some quality assurance

tests were carried out on solid concrete blocks, steel

reinforcement, cement, aggregates for concrete, sand,

and timber before being incorporated in permanent

works; the test results for the 46 resettlement houses’

project were reviewed during audit and found to comply

the strength of concrete used on the structure on the basis

of the elastic properties or strength of concrete or rock,

mainly surface hardness and penetration resistance.

hammer tests for the three schools where works were

still in progress on concrete elements (beams and

whether the strength of concrete used for the works met

Where tests couldn’t be done, conclusions were drawn

and other test results were compared to the results on

The Schmidt hammer test results for the school facilities

were within the required range of 25Mpa which is within

the various structural components of the buildings as

shown in Appendix 4.

However, while the material test results for concrete

observed were above the recommended maximum 20mm

size.

Management Response

There was a challenge of supply of the recommended size

of aggregates due to distance involved but the big size was

used in less critical areas e.g. the splash aprons. During

execution of works, emphasis was put on consolidating

the concrete

Owing to poor accessibility to the site, works at Kyapaloni

Primary School commenced in June 2016. By this period,

the Kolin Construction quarry in Buseruka had closed

operations. This closure caused the Contractor to look for

alternative sources for the same material from as far as

Kampala. The Consultant recommended locally available

aggregates for use on condition that they were sorted

prior to mixing and well vibrated to avoid honeycombing.

Audit comment

On the basis of inspections undertaken as at November

2017, the works were generally in accordance with the

ensure that proper feasibility studies are done before

procurement of contractors so as to locate the sources

of required materials prior to start of construction works.


33

4.3.2.2 Needs Assessment

The International Finance Corporation (IFC) Standards

on Land Acquisition and Involuntary Resettlement

performance standard 5 requires that resettlement sites

be chosen through consultation with all the displaced

people and host communities. The site selection and the

shelter and infrastructure options provided at the new

sites are required to reflect both the preferences of the

affected population and the best opportunities for timely

restoration of livelihoods. Furthermore, the two most

critical concerns in selection of a resettlement site are

location and community preservation. Also, to restore

livelihoods successfully, it is important to provide the

PAPs with reliable access to productive resources such

as arable and grazing land and water28.

Interviews at Nyahaira village with the PAPs scheduled

to be resettled at Kyakaboga revealed that initially during

sensitization, SFI informed the PAPs that land would be

identified in the neighbourhood of the refinery on case by

case basis to construct the houses and provide farm land

as a full package of resettlement. This was in conformity

with the recommendation in the Resettlement Action

Plan29. However, during the final disclosure, a committee

was constituted to take the lead in the identification of

land that was to be procured for the houses and farm

land and also to discuss the plan of the houses. The

committee noticed the following and expressed their

concerns to SFI:

• The land was not identified on a case by case basis but

rather as a whole;

• The acreage of 50ft by100 ft where each house was to

be constructed was too small to accommodate the

animals and birds that the PAPs reared;

• The plan of the houses did not cater for the cultural

set ups and norms of the PAPs. For instance, the PAPs

used to live in a homestead set up where the family

head would provide land to the elder children to put up

their houses. While some had more than one wife;

• The farm land was far away from where the houses

were located.

Whereas the PAPs were consulted during land acquisition,

the concerns that they submitted were not considered

during implementation by SFI.

The non-inclusion of the concerns of the PAPs was

attributed to the reluctance by the SFI to do so.

Consequently, the PAPs have been reluctant to occupy

the houses. For instance, out of the forty six (46) PAPs

supposed to be resettled; only four (4) had picked their

keys by the time of audit (November, 2017). PAPs have

continued to live in temporary houses especially in

Kyapaloni.

Management Response

During the RAP study only 27 PAPs had opted for relocation,

it was therefore easier to procure land then on a case by

case basis. However, when the numbers increased to 93,

it became difficult to acquire land on a case by case basis given the lengthy procurement requirements. The project affected persons were involved in the identification and acquisition of the resettlement land and it was only after they had given their concurrence that the land was

acquired by government in Kyakaboga village.

In 2012 the Albertine Graben of which the project area

forms part was declared a special planning area requiring all developments in the Graben to be properly planned. It is

for this reason that the Ministry requested the Ministry of Lands, Housing and Urban Development to plan the area

28 Butama Hydro-Electricity Company Limited, 2014 ‘Resettlement and Compensation Action Plan for the proposed Sindila mini hydropower project in Sindila sub-county, Bundibugyo district, Uganda.’29Refer to RAP, page 34


34

before commencing the construction of the resettlement

houses. The Ministry of Lands involved the PAPs and local

leaders in the planning processes and they were equally consulted on Physical Development Plans before their

approval by Hoima District and Buseruka Sub County.

The houses were commissioned on 10th August, 2017

and to date 32 project affected persons have signed for

keys to their houses. Those who have not yet signed say

they will sign once electricity is connected to the houses

and individual titles provided to them. We have provided

food stuffs to the project affected persons to ensure food

security during the transition period.

Audit Comment

The management’s submission is noted. However, it does

not justify the fact that the PAPs were mis-informed at the initial disclosure.

Secondly, regarding the submission that the Albertine

graben was declared a special planning area, the MULHD

and SFI should have designed the resettlement area

in line with the IFC standards on land acquisition and involuntary settlement in order to ensure that the PAPs

are not entirely robbed of their cultural setup.

In addition, the evidence of the 32 PAPs who had signed

for the keys to their houses as well as evidence of

provision of foodstuffs was not availed to the audit team

for verification.

Recommendation

MEMD should ensure that in future projects, issues of

concern discussed with the PAPs are duly implemented

and where there are deviations adequate sensitization of

PAPs should be undertaken for acceptance of the project

and compliance with international standards.

4.4 GRIEVANCE HANDLING

Section 5.10 of the RAP, required the RAPIA to maintain

a grievance management database, grievance files and

grievance initiation forms. The agency was also required

to constitute a mediation committee. Registration of

grievances was expected to be done within two days and

feedback within a period of two weeks.

However, through review of documents from the

consultant, the audit team found that there was neither

a grievance management database nor grievance files

as was expected. The audit team was only provided with

a book where PAPs’ grievances were recorded and one

status report of March 2014. Additionally, PAPs were not

given copies of the grievance initiation form and as such

were left with no evidence of having lodged complaints.

Further still, it was found that the mediation committee

was not constituted30.

In addition, scrutiny of documents, interviews and physical

inspections, found that although a number of grievances

were said to have been resolved as per March 2014

grievance status report, the audit team found that there

were grievances that were not yet resolved at the time

of audit as shown in Appendix 5. and in Figure 5 below.

These unresolved grievances were lodged by both paid

and unpaid PAPs. Interviews with the PAPs also revealed

that after they lodged complaints and were registered

by the consultant, they were not given feedback on their

grievances.

30 The mediation committee would be comprised of representatives from the village council, Parish Land committee, PEPD representative, Ministry of Justice, RAPIA official, Area District Councillor, NGO Representative, Area Female Councillor and Village RAP committee Representative. (RAP 2012 page 45)


35

Building belonging to Mwambe Evelyn in

Kyapalani trading centre that was not included

in valuation report.

Figure 5: Examples of unresolved grievances

Image Comment

Tugarukayo Aben (in red) poses in front of his

house in Kyapaloni which was not included in

valuation report. The land on which it is built was

valued.

House in Kyapaloni belonging to Oketch David

but was not captured in valuation report. The

land on which it is built was valued.

Source: OAG field inspections

Audit attributed non-handling of the grievances to lack

of supervision and monitoring as the consultant who was

supposed to undertake the Monitoring and Evaluation

was procured in June 2017, three (3) years after the

implementation of the RAP activities had commenced.

In addition, the NGO that was expected to carry out

compliance audits had not been procured by the time of

audit (November 2017).

Consequently, PAPs who remained with unresolved

grievances were left dissatisfied.

Management Response

Management notes the observation by the Auditors:

The consultant would like to note that there was a

database for grievance handling; the counter book was

for capturing initial information which was transferred

into the database.

Given the above, all the registered grievances were

recorded and reviewed by the consultant together with

the village RAP committees with the participation of the

PAPs. Those grievances which required revaluation or re-survey were handled accordingly and supplementary valuation reports produced and submitted to the CGV for

approval and later disclosed to the PAPs.

Regarding the three PAPs highlighted in the report,

verification shall be done to ascertain the status of their


36

grievances.

Audit Comment

Audit notes that the database does not exist. The

database referred to are assessment forms for capturing

property owned. The database should have recorded the

initial grievance, how the grievance was monitored and

finally resolved which was not captured in the evidence presented.

Recommendation

MEMD should ensure that in future projects, proper

grievance-management mechanisms are put in place

to address any complaints that arise as per prescribed

process.

4.5 SOCIO-ECONOMIC BASELINE SURVEYS

In order to have a systematic monitoring and evaluation

exercise, it is essential to have baseline data relating

to the pre-project conditions of the PAPs. Further, this

baseline data informs the basis for livelihood restoration

by making comparisons with the later changes in the living

conditions of the PAPs as a result of the compensation

process and at the same time evaluate if there are

positive changes. Also, the Socio-Economic Surveys can

be an input while costing the budget.

Therefore the contract signed between SFI and MEMD

to carry out the RAP required SFI to carry out Socio-

Economic Surveys. Whereas the contract did not spell

out the data that was needed on various parameters,

the world bank guidelines require the involvement

of potentially displaced people, including results of

household and census survey, information on vulnerable

groups, information on livelihoods and standards of

living, land tenure and transfer systems, use of natural

resources, patterns of social interaction, social services

and public infrastructure31.

A review of the RAP indicated that SFI carried out a

Social-Economic Survey and included parameters as

best practices dictate.

The RAP study registered 7118 PAPs in total. However,

there was no documentation of how this number of PAPs

was identified and neither an explicit list to show all the

PAPs due to absence of primary data. There was also a

variance between the number of PAPs reported during

the census and those that were actually paid. 2473 PAPs

were identified during the RAP while 2657 were paid.

The SFI consultant explained that during the socio

economic survey, the names of the PAPs were not

captured but were interested in the socio and economic

characteristics of all members of the affected households.

Without attaching the names during the socioeconomic

survey, it was difficult to reconcile the directly affected

land owners and licensee tenants (2473) with the

project affected persons (7118) and the 2657 who were

compensated as per the payment files.

Also, without adequate baseline data, it may be hard for

MEMD to carry out the livelihood restoration activities

and also to evaluate whether the objectives of the project

have been met

Management Response

The social economic baseline survey was conducted using

a social economic baseline survey tool designed to target

the parameters of interest especially in describing the

Social economic characteristic of the PAPs at the time.

Because of the need to adhere to confidentiality and other ethical considerations, the social economic baseline

survey report does not capture the names of PAPS though

sometime the survey tool can be designed to capture the

names with the interest of ensuring authentic responses

31 World Bank 2012, Guidance Note 5 Land Acquisition and Involuntary Resettlement page 28


37

from the respondents. It should also be noted that names

cannot be coded during data entry and analysis. However,

the names of only property owners and serial numbers

were included in the valuation report.

Whereas the total number of PAPS affected by the

refinery was 7118, the property affected persons were 2680. This number kept on changing from the original

2473 as a result of including those PAPs mainly tenants,

who had lodged complaints, either because they were

missing on the original report as a result of capturing

only their landlords. There were also subdivisions of

plots especially among family members after the original

cadastral survey that led to increment in the number

of property owners. In some instances, PAPs who had

lodged complaints and were discovered not genuine were

removed and not considered for compensation. These

were regularly captured in our departure accounts with

the nature of complaints for further management.

Audit Comment

The audit team noted that the raw data provided by

MEMD management only lists heads of households,

however, not all property owners and tenants were heads

of households. The information provided is therefore

not sufficient to conduct a reconciliation of the property owners and licensee tenants with the total number of

7118.

Recommendation

The MEMD should ensure that in future projects, sufficient

data of the PAPs is captured during the social economic

survey to enable proper reconciliation of the total

population and the PAPs eventually paid for assurance

that eligible people benefit from the compensation.

OVERALL CONCLUSION

There were notable achievements in the compensation of PAPs in the refinery project. MEMD successfully compensated

99% of the PAPs who were eligible for compensation. Some infrastructure works such as construction of 46 residential

houses and improvement and expansion of Buseruka Health centre have been completed and handed over to the

Ministry. The quality of the infrastructure was to a great extent assessed as satisfactory.

The foregoing notwithstanding, significant delays were noted in the overall implementation of the project particularly in

payment of PAPs and construction of resettlement infrastructure. Key activities of the RAP such as procurement of a

consultant to undertake monitoring and evaluation of the project, construction of schools and places of worship, as well

as implementation of the livelihood restoration programme were delayed as well.

The use of unapproved/obsolete valuation rates was noted in almost all the years of compensation, and rates were not

applied uniformly thereby causing grievances and delays in the compensation process. Failure to adhere to the PAPs’

proposals during construction of resettlement houses also affected acceptance.

It is hoped that the proposed recommendations will go a long way in improving the management of future compensation

projects.


38

The Constitution of the Republic of Uganda, 1995

The Strategic objectives and actions relating to the establishment of an oil refinery and issues relating to the compensation of project affected persons

• The provisions of the Land act, as well as internalize and get criteria in relation to compensation and resettlement of Project Affected Persons• The roles of MLHUD in the compensation process

The provisions under this Act on the compulsory acquisition of land for public purposes and for matters incidental thereto and connected therewith and establish their shortfalls.

• The provisions under the act on matters relating to land acquisition in line with Petroleum activities.• The key players in the compensation process • The requirements under the law relating to compensation and resettlement in the petroleum sector.

• The terms of reference and the expectations • To help in answering the audit questions.The progress and challenges of MEMD regarding the oil refinery project

• The objectives, plan and intended activities in the implementation of the resettlement and compensation process.

• Criteria to help in answering the audit questions.

The feasibility report that was conducted to assess the potential of constructing an oil refinery and a crude pipeline and also the basis

that was used to identify the location that was selected.

National Oil and Gas Policy 2008

Land Act 1998 (amended 2010)

Land Acquisition Act 1965 (Chapter 226)

Petroleum (Exploration, Development and Production) Act 2013

The Resettlement Action Plan for the Proposed Acquisition of Land for the Oil Refinery in Kabaale Parish, Buseruka Sub-County, Hoima District 2012

RAP study contract

MEMD Annual Report, 2013

The Tanzanian Resettlement Policy Framework

The definition of PAPs and also understand the principles of compensation

Uganda Refinery Summary Report, Ministry of Energy and Mineral development, 2011 (Foster Wheeler Report)

International Finance Corporation Standards on Land Acquisition and Involuntary Resettlement PS5

Best practice for compensation

Implementation of the Oil refinery RAP in Uganda

The challenges faced by the PAPs from the view of NGOs

The provisions related to land acquisition and obtain criteria

Appendix 1: DOCUMENTS REVIEWED

Document Purpose: To understand/ obtain information on:-


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Contracts/addendums for the provision of consultancy services to implement the RAP for the oil

Payment files The amount and period of payment to the PAPs

Valuation books The total cash compensations

District rates The rates used during compensation

Write up from MLHUD, 2015 The roles and challenges of the CGV

• The activities required to be implemented by the consultants • The criteria in regard to the timelines of the implementation compensation activities.

To obtain criteria of the methods used for valuation of property permanent nature

Criteria for the construction of the resettlement infrastructure.

• Criteria to be able to answer the audit question on resettlement• The TORs for construction of the infrastructure

Valuation methodology

Inception report for the consultancy to implement the RAP, 2013

Contracts between MEMD and contractors to build/renovate resettlement infrastructure


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Appendix 2: Interviews conducted

• The Activities revolving around compensation.• Relating to cash compensation and resettlement.• The causes and consequences of the deviation

from the required practice.

• The CGV’s role in the compensation process• The basis of setting and approving the rates• The causes and consequences of the deviation

from the required practice.

• The planning, implementation and monitoring of the RAP

• Grievance handling

• Causes and effects of the delays in payments • Causes and effects of the delays in the resettlement• Grievance handling

• The challenges in the oil refinery compensation process as viewed by the NGOs

• The role of the HDLB in the compensation process

• The role of the HDLB in the compensation process

1. Oil Refinery Project management

2. Chief Government Valuer

3. Hoima District Land Board

4. District Valuer, Hoima

5. Strategic Friends International

7.

6. PAPs(Nyamasoga, Kitegwa,

Kyakaboga, Kyapaloni, Kabaale1,

Katooke, Nyahaira, Kaseeta,

Nyakabingo, Zorobi, Chunga-jembe, Kanyegaramire and Hohwa

Non-Government Organisation

(NAVODA)

S/N Interviewee Purpose: To obtain information on:-


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: U

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42

Appendix 4: Schmidt hammer test results for constructed school facilities

Source: OAG technical engineer ing tests in the fiel d

Strip Concrete 230mm C15 15.8 NT

Class room Ring beam C25 25.8 26.9

Floor Slab C15 15.9 21.3

KYAPALONI PRIMARY SCHOOL

Class room Ring beam C25 25.3 NT

Floor Slab C15 N/A N/A

Column C25 25.2 NT

BUSERUKA PRIMARY SCHOOL

Floor Slab C15 N/A N/A

Concrete ramp C15 N/A 15.5

Gauge 26 roofing 26 N/A 28

46 RESETTLEMENT HOUSES

Flakiness Index 35 Max 11, and 20

Silt Content of Sand 4 max 2

Initial Setting time (Cement) ≥ 75 125

Final Setting time (Cement) ≤ 600 340

Tensile strength ( bars) 460 minimum 639, 598,619

Passed as per CML Results

Passed

Passed

Passed

Passed

Passed

Passed

Passed

Passed

Not tested due to large size aggregates.

Contractor to be paid using rate of G28.

Passed as per

CML Results

NYAHAIRA PRIMARY SCHOOL

He was paid for land of size 8.98 acres. He had crops on the land, but they were not valued.

His plot was missing in the valuation report/book and yet was appearing on the strip map by the consultant. The building structure that was on the land was also not included

Complained that he had his properties missing i.e. jackfruit, beans, maize, bananas. Raised complaint in 2014.

I acre was not registered. Mande complaint with SFI

Two acres of land were not included among his valued properties.

Project compensation form showed crops of cassava (40x16) m2, 5 acacia trees (mature), 3 mature bush trees, 3 earthed graves, and 1 grass thatched house.

Upon valuation and disclosure, only the house was valued minus the crops.

Compensation form shows he had crops, but valuation book does not show any crops, thus, his crops were not included in valuation amount. Upon valuation

and disclosure, only the house was valued minus the crops.

Had 22.6 acres as per strip map but was paid for 19.01 acres. Complaint never resolved.

The crops reflected in the valuation book was less than that on the PAP’s

compensation form

He has not yet occupied the house allocated to him because they had not yet given them essentials to restore their livelihood

His house was not valued but OAG inspections noted that actually the house

existed but he was only given land in Kyakaboga

His house was not valued and he was allocated land only in Kyakaboga

The PAP was paid ugx 3,000,000 for 0.25 acres of land instead of 1.2 acres he was entitled to.

Not paid for land measuring 0.26 acres however, the acreage was reflected on the strip map

HORKYAP097 He was paid for 19.01 acres instead of 22.67 acres. HORNYAH688 He had 13 graves but he was paid for 1 grave

The land allocated to him for growing crop was rocky to grow crops

Was undervalued and paid 22M. Some of her crops were not valued.

Property No on compensation form No in valuation book

Pumpkin 35 8

Mangoes (young) 14 10

Jackfruit (young) 24 14

Tobacco 0.19 acres 420

Odugu 1 0

Latrine 1 0

Bathroom 1 0

HORNYAH263

HORKYAP593

HORBKA175

HORKIT054

HORKIT035

HORNYAH701

HORKYAP215

HORKABII002

HORKYAP097

HORBKAI175

HORKYAP258

HORKYAP345

HORKYAP446

HORBKA109

HORKYAP215

Appendix 5: Unresolved grievances

PAP Grievance

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