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OFFICE OF THE AUDITOR GENERAL
www.oag.go.ug | E-mail: [email protected]
A REPORT BY THE AUDITOR GENERAL
DECEMBER 2017
Impact of the PRiDe Project implemented by MAAIF - December 2017
1
A REPORT BY THE AUDITOR GENERAL
DECEMBER 2017
THE REPUBLIC OF UGANDA
OFFICE OF THE AUDITOR GENERAL
THE COMPENSATION OF PROJECT AFFECTED PERSONS UNDER THE REFINERY PROJECT BY THE MINISTRY OF
ENERGY AND MINERAL DEVELOPMENT
OFFICE OF THE AUDITOR GENERAL
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
Compensation of PAPs under the Refinery Project by MEMD
ii
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
Compensation of PAPs under the Refinery Project by MEMD
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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
Compensation of PAPs under the Refinery Project by MEMD
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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
v
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.
Compensation of PAPs under the Refinery Project by MEMD
vi
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.
Compensation of PAPs under the Refinery Project by MEMD
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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.
Compensation of PAPs under the Refinery Project by MEMD
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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
Compensation of PAPs under the Refinery Project by MEMD
3
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
Compensation of PAPs under the Refinery Project by MEMD
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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?
Compensation of PAPs under the Refinery Project by MEMD
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Compensation of PAPs under the Refinery Project by MEMD
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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
Compensation of PAPs under the Refinery Project by MEMD
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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.
Compensation of PAPs under the Refinery Project by MEMD
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Chapter Three
Compensation of PAPs under the Refinery Project by MEMD
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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
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
12
Ch
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Fo
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Chapter F
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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
Amendment 2 17/08/2016 - 16/02/2017 Time extension
Amendment 3 16/02/2017 - 16/12/2017 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
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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
HORNYAH253 Nyahaira 11/8/2015 19/10/15 76,235,887
HORNYAH258 Nyahaira 11/8/2015 19/10/15 61,308,910
HORNYAH268 Nyahaira 11/8/2015 19/10/15 19,957,899
HORNYAH278 Nyahaira 11/8/2015 19/10/15 24,686,480
HORNYAH702 Nyahaira 11/8/2015 19/10/15 43,033,900
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
HORNYAH350 Nyahaira 11/11/2015 11/01/16 26,994,412
HORNYAH805 Nyahaira 20/11/2013 11/01/16 1,023,750
HORKYAP096 Kyapaloni 13/01/15 11/01/16 24,726,650
HORKYAP071 Kyapaloni 5/11/2016 12/01/17 780,000
HORNYAH217 Nyahaira 4/11/2016 12/01/17 10,792,158
HORNYAH208 Nyahaira 4/11/2016 12/01/17 21,060,000
HORNYAH854 Nyahaira 3/11/2016 12/01/17 44,313,568
HORNYAH656 Nyahaira 4/11/2016 12/01/17 4,335,500
HORNYAH259 Nyahaira 3/11/2016 12/01/17 13,045,500
HORNYAH080 Nyahaira 3/11/2016 12/01/17 72,351,435
HORNYAK049 Nyakasinini 4/11/2016 12/01/17 15,856,867
Source: OAG analysis of PAPs’ payments
Compensation of PAPs under the Refinery Project by MEMD
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.
Compensation of PAPs under the Refinery Project by MEMD
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.
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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.
Compensation of PAPs under the Refinery Project by MEMD
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.
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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)
Compensation of PAPs under the Refinery Project by MEMD
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.
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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)
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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
Compensation of PAPs under the Refinery Project by MEMD
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.
Compensation of PAPs under the Refinery Project by MEMD
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:-
Compensation of PAPs under the Refinery Project by MEMD
39
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
Compensation of PAPs under the Refinery Project by MEMD
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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:-
Compensation of PAPs under the Refinery Project by MEMD
41
Ap
pe
nd
ix 3
: U
nif
orm
ity
of
rate
s
Compensation of PAPs under the Refinery Project by MEMD
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
43
Compensation of PAPs under the Refinery Project by MEMD
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OFFICE OF THE AUDITOR GENERAL
T H E R E P U B L I C O F U G A N D A