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Lawsuits to delay Uganda’s first oil

Troubled by government’s reluctance to listen to their pleas over low compensation rates, residents who lived at the refinery site and along the Hoima-Kaiso Tonya road have filed separate lawsuits in court in what could further delay Uganda’s journey to producing its first barrel of oil by 2018.  

At least 86 residents who turned down the compensation government had given them, say that not only was it unfair for the state to make such a low offer, it was worse that they were stopped from developing their land.

“The plaintiffs-are-oil-refinery project affected persons who have been stopped from developing their land since June 2012 without prompt, fair and adequate compensation by government,” their plaint reads in part.

A couple of hours after the suit against construction of the refinery was filed, residents on the Kaiso Tonya road made their move too.

Through a representative suit in the land division of the High court, residents have challenged Uganda National Roads Authority (UNRA) and its agent’s action for taking possession and grading their land, and destroying their property before paying them, and, to those who have received money, offering meagre compensation rates.

The hearing stops further development on the road until court has heard and disposed of the case.
Also, government will have to halt its plans at the refinery site until court settles the case involving the 86 residents at the refinery.

Oscar Kihika, a city lawyer who closely follows the oil and gas sector, says such cases are bound to come up, especially where there are oil and gas activities.

“From what I know, these lawsuits will certainly delay the oil production, but the impact may not be adverse,” he said.

Uganda is expected to announce the winning firm to lead the construction of the refinery in June. A court case could send worrying signs to the investors even after getting government assurances.

The Hoima-Kaiso Tonya road is important because it will host heavy tracks. The road connects to the oil wells and the oil refinery site. As it is, investors in the industry are worried about the sluggish pace that oil activities have taken.

Some logistics firms, who had bought huge trucks in anticipation of booming business, have been left licking their wounds due to the low activity in the sector. These logistics firms are now looking across the border for business.

For Hoima-Kaiso Tonya road, the affected persons, who total about 600 and live in more than 21 villages, claim that Mapcon, a private company UNRA contracted to carry out the valuation, didn’t follow government’s principles of property valuation.

They claim that their property was unreasonably undervalued and their pleas to have these valuations reconsidered were ignored.

Aggrieved by the low rates, the affected residents, through their lawyers, Madibo Mafabi Advocates, hired Osi international consultants, which conducted an independent survey of the land and a valuation and assessment of the crops at the current market price.

Osi issued its report in September last year. The report pointed out that UNRA’s compensation rates were low.

“After analyzing all the factors affecting property market and values in Hoima district and its neighbourhood, and considering those factors surrounding these particular properties in their present, physical, geographical, structural and legal status, we are of the opinion that their current total value for compensation claim, together with allowance for disturbance, is in the range of Shs 8.2 billion,” the valuation report reads.

The hearing of the injunction is scheduled for July 9, 2014. This means Kolin Construction Ltd, a Turkish firm constructing the road on behalf of UNRA, has to stop its activities until court has heard and disposed of the case.

For the 86 residents, who are part of the more than 7,000 people facing eviction to pave way for the building of the refinery, the money just wasn’t enough. Whereas the rest of the residents accepted the compensation rates and many of them have since been paid, the 86 declined the money arguing that the rates were below the current market value of their crops.

In an earlier notice of intention to sue, the residents had claimed that the compensation rate of Shs 3.5m per acre that was provided as compensation was unreasonably low, inadequate and unfair and demanded to be paid at least Shs 6.5m per acre considering the current market price of land in the area.

ssekika@observer.ug

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