Uganda: Oil brings quick cash, dashed hopes

LAKE ALBERT, Uganda — Roughly 120 miles northwest of the capital, Kampala, the asphalt road gives way to amber-colored soil and Uganda’s oil country begins. This remote region last captured the imagination of the West in the Victorian age, when gentlemen explorers arrived in search of the Nile’s source. Those adventurers are long gone, although their legacies are kept alive in the names of colonial-era hotels and resorts. Today a new breed of explorer is arriving: oil-industry employees in search of crude.

After the discovery of commercially viable oil reserves in 2006, companies including London-based Tullow, the French Total and the Chinese government-run CNOOC began drilling exploratory wells in the Lake Albert region. By 2009, the region’s reserves were estimated at 6.5 billion oil barrels. According to the World Bank, that would be enough to potentially remake Uganda, where the gross domestic product per capita was roughly $572 in 2013, into a middle-income country within 25 years.

Villagers around Lake Albert had high hopes for how oil would transform their region. Companies pledged new roads, schools and health clinics. But nearly a decade after the discovery of oil, little of that promised infrastructure has been built. Meanwhile, exploratory drilling has ruined crops and killed off fish, eroding people’s livelihoods. Oil companies have made cash payouts to affected families, but that money has sometimes increased tensions among family members and torn through the social fabric of villages.

“The influence of oil is further disenfranchising communities in the region,” said Kathleen Brophy, a program officer with Transparency International, an anti-corruption nonprofit. “It is introducing new dynamics of poverty.”

Tullow spokesperson Conrad Nkutu said that the company expected to create as many as 150,000 jobs in the country. “We abide by the highest standards of environmental, social, ethical and legal conduct,” he wrote in an email. Total and CNOOC did not respond to repeated requests for comment.

The most dramatic consequence of the oil drilling so far has been the forcible eviction of 230 families last August to make way for a petroleum waste-management plant. In the village of Rwamutonga, local strongmen working for the Texas-based McAlester Fuel Company hired gunmen to drive out the families, according to residents. The families were forced to settle on a nearby plot, where they still reside in tents. An elderly man and two children are still missing, likely killed during the violent raid, according to an internal Transparency International report.

Villagers said they were not compensated for their lost property. The residents filed a lawsuit against the strongmen in November 2014, and the case is ongoing. Leonard Durst, an operations manager with McAlester, denies the company’s involvement in the eviction. He said that McAlester asked the local strongmen to acquire the necessary acres and said that he was not aware that it had been done through allegedly violent means. Residents of the Lake Albert region and activists fear evictions like this will become more common as companies expand production.

In Kaseta, a neighboring village of grass-thatched huts, the drilling has damaged the cassava crop and disturbed Lake Albert’s fish stock, according to Paolyel Onencan, director of a local agriculture nonprofit called BURIDO. “The seismic surveys destroyed people’s crops,” he said. “But some answers are still unanswered. For example, what is going to happen to our fish supplies? Will we be the last generation of fishermen?”

In the past few years, oil companies and the Ugandan government began compensating some of the farmers and fishermen who continue to tend to their cassavas and cast nets for tilapia in the lake. In Hoima district, home to Kaseta village, Tullow, Total and CNOOC collectively distributed $70 billion shillings (approximately $27 million) to villagers, according to Onencan. The payout was to account for future losses in earnings, according to Dickens Kamugisha, who founded Africa Institute for Energy Governance, an environmental advocacy group.

Sylvest Irumba, a local government representative in Kaseta, said that soon after his neighbors received payments ranging from a few thousand dollars to as much as $100,000, they began wasting their cash on motorcycles, beer, and, for some, second, third or even fourth wives. The village fell into a state of lethargy as residents grew accustomed to easy money.

“If you have a man who has never dealt a hundred-dollar bill before and give him $20,000, he goes mad,” said Chris Musiime of Oil in Uganda, a publication aimed at bringing transparency to the energy sector. “Very few made smart decisions. Most wasted their money. And now they are waking up and realizing, ‘Oh shit, what do I do?’ ”

In Nyamasoga village, Janet Gipato’s husband disappeared a year ago. One day last year, Gipato noticed that he seemed to be buying a lot of new farming equipment. They were subsistence farmers, living hand to mouth, so the purchases came as a surprise. When he brought home a particularly expensive milling machine, she knew that something was up. But whenever she tried to get a straight answer from him — where was all the money coming from? — he would deflect her question.

Next, her husband began taking overnight trips to neighboring towns. This went on for a few months, until one day he did not return. It wasn’t until she attended the funeral of one of her husband’s relatives last spring that she understood what had happened. There, she met two women who introduced themselves as the second and third wives of her husband. In Uganda, wives are seen as a marker of affluence, a status symbol signifying that the man has enough wealth to support a large family.

Gipato started investigating and learned that her husband had been the main beneficiary of an oil-compensation payout. She didn’t know which oil company or when the money had been delivered. All she knew was that his was the only name on the deed for the land they had both lived on for decades — and on which they had raised their four children. Gipato guessed that her husband had collected as much as $10,000. Kaseta and nearby villages were full of women like her who had “lost their husbands to money,” she said.

Trust among villagers, too, has eroded, people here said. In the past, shepherds would bring their sheep or cows to drink from the lake and, in return, would allow fishermen or their wives to grow vegetables on the shepherd’s grazing land. Oil introduced fences and private land ownership to the Lake Albert region, putting an end to these informal arrangements.

And because farmers across the oil region feared being driven from their homes to make way for drilling, many did not bother planting their crops this season. Onencan of BURIDO warned that this could have harmful consequences for the area’s food supply, but added that he did not blame the oil companies. “They are businesspeople. It’s the government that is doing us wrong. It doesn’t have good policies, and the oil companies are taking advantage.”

The Ugandan government has yet to take meaningful steps to regulate the oil industry, according to George Boden, a campaigner with the watchdog group Global Witness. President Yoweri Museveni personally makes most of the decisions about the industry; he is widely believed to consider oil a means of supplying his personal coffers and maintaining power. Many of the production-sharing agreements, which outline how oil revenues will be distributed between the government and the companies, remain a secret. That’s unusual even by regional standards, which tend to favor oil companies.

Half of the projected oil reserves in the region are within Murchison Falls National Park, the country’s largest and oldest conservation area. On a recent weekday, the lodge there was fully booked, not with tourists but with oil executives arriving to check on their wells. In Murchison, an encounter with buffalo, elephants, lions or leopards is no longer a given. Its rhino population was wiped out by the poaching mania of the 1980s, and conservationists now worry that Murchison has no defense against the advances of oil companies: Already, drilling has commenced on park grounds. They point to neighboring Democratic Republic of Congo, where the government is reportedly considering redrawing the boundaries of Virunga National Park in order to accommodate the oil company SOCO International’s proposed exploration.