Month: October 2022

The King Fisher Project is a textbook of Example of A Mutually Beneficial Partnership

Posted on By Sino Uganda Research Centre

In 2016, the diplomatic relations between China and Uganda assumed a new mile stone when the two nations agreed to elevate their relations to the level of comprehensive co-operation partnership. This meant new heights of co-operation through harmonizing foreign and domestic policies to achieve social- economic transformation and building a community with a shared future in form of a win-win co-operation strategy as a common goal by both states. Through the king fisher oil project in the Albert region, the government of Uganda, contracted the China National Offshore Oil Corporation (CNOOC) to spearhead the construction of the site and subsequent oil drilling in the area.

The king fisher project is located in Kikuube and Hoima Districts in the valleys of Buhuuka parish along lake Albert. The first challenge CNOOC inherited was the inaccessibility of the Kingfisher area, surrounded by steep mountains and rocks. The only mode of access was by air or sea. Locals navigated the hostile lands by walking long distances of about 3 hours to reach neighbouring villages. However, CNOOC in collaboration with Uganda government helped to construct a standard road through the rocky hills and mountains. This eased access for both company workers and the locals to their respective destinations.

Cross border trade between Uganda and Congo and economic activity within the native local community has also improved since residents can now move to Hoima city more conveniently. The road has also made it possible for cargo to be transported to the landing site designated for neighbouring Congo hence widening Uganda’s exportation capabilities and earning the government revenue. CNOOC directly employs about 280 Ugandans which is about 78 percent of the company’s labour force. Additionally, CNOOC contracts 42 other local contractor companies to handle site development projects which also employ about 1,334 other Ugandans to the project. Ugandan experts and engineers have gained valuable training from CNOOC which is preparing them in the long-term to manage future oil projects.

CNOOC has aided and supported life transforming projects and workshops for the affected communities. These include live stock and crop development program to train famers better farming mechanisms as a surplus to fishing. This has helped alleviate the problems of fish hunting that risk depleting the fish resource. Under the live stock and crop development program, the communities have been enlightened about better ways of farming and a total of 315 affected people engaged in the program. The parish selected 9 farmers that received 9 boram bulls, 10 poultry famer’s groups received 500 chicken each, as well as 9 others that received 5 exotic piglets and boer buck goats. I also learnt that the empowered poultry farmers now supply eggs and chicken to king fishers’ welfare needs department hence earning income that has improved economic status.

CNOOC has also opened up skill workshops to the affected population in Kikuube district. They include Manual skills training fully funded by CNOOC. Many Ugandans have attained welding skills at munteme vocational training Institute and they will be deployed at the construction of the East African crude oil pipeline (EACOP). Others in Hoima city in collaboration with Bunyoro Kingdom have been trained to operate heavy cargo vehicles and a large number have been added to that program and are currently being trained.

The Buhuuka water project scheme was fully funded by CNOOC has transformed the lives of the native affected communities. The water scheme currently supplies local residents with purified and clean water. The water is piped and delivered to the locals. Some of the locals who opted for fully furnished houses instead of cash compensation as resettlement fees, can readily access water through water tanks connected to their houses. The water scheme has alleviated water pollution and its related effects of diseases. Before, the CNOOC led water scheme, the locals were constantly hit by the deadly Bilhazia which seems to have completely been eradicated for now. The community also was availed a health center that extends affordable health services to them. The clean and purified water project is currently being managed by the locals who have been trained by CNOOC engineers on the technicalities of maintaining a complex water scheme.

To conclude, the Kingfisher project run by CNOOC is to a large extent a success story for the collaboration between the Uganda and China peoples. It is a testament to the power of mutual friendship for mutual benefit and underlines China’s commitment to working with developing countries to attain sustainable development and build a community of common prosperity and shared future and prosperity for mankind.

Balongoofu Daniel, Research Fellow Sino-Uganda Research Centre.

 

 

 

 

 

60 years of Diplomatic Relations: Uganda should learn from China’s rapid industrialisation story

Posted on By Sino Uganda Research Centre

Time and again, perhaps more frequently in the last 10 years, the Ugandan President has been on record talking about the need to industrialise or revamp at that, Uganda’s largely agro-based economy. The gospel of industrialisation and manufacturing has been so enthusiastically preached that various industrial parks have sprouted up in various regions in East Africa’s fourth largest state namely Kapeeka, Namanve and Mbale among others, thanks to Chinese heavy investments in these projects. Stories of Chinese industries in Kapeeka industrial park are inspiring. Literally, Chinese investments there have turned the once war war auditorium to flourishing industrial epicenter offering employment opportunities to thousands of Ugandans.

An objective assessment of the performance of these industrial projects illustrates that whereas as commendable achievements have been realised, much is left to be desired. That, exactly is why and where, the ‘banana republic’ can make use of its ally, the Peoples’ Republic of China, in as far as benchmarking some of the ideas that the Asian power house deployed to craft up one of the world’s fastest industrial revolutions, so as to realise her ‘industrial potential’.

Herein then follows a brief illustration of the evolution of China’s industrial revolution with the crux of the discussion being the mechanisms and policies that were employed to achieve that fete and perhaps how an industrialising Uganda may benefit from such. A former ‘agro-nation’ itself, China may effectively provide some practical solutions to Uganda’s ambitious industrialisation campaign.

The timeline of China’s over 40-year-old industrial revolution is indeed wide and requires more than a few worded-essay to extensively discuss however in the interest of being brief but concise, it can be argued that the revolution featured four distinct periods.

The revolution started with the system transition period (1978-1991), the market economy establishment stage (1992-2001), the period between China’s accession to the WTO to the 18th National Congress of the CPC (2001-2012), and the period since the 18th National Congress to date (2012-2020). Throughout the above mentioned stages, China implemented major industrial reforms that can be attributed to its status as the world’s principle industrial powerhouse today.

For purposes of this discussion and logically because Uganda can be argued to be in the early stages of its industrial revolution or revamp, focus will be emphasised on China’s similar system transition period to identify the foundational blocks laid to support the growth of a robust industrial sector, that the ‘pearl of Africa’ may learn from.  According to Wei Jigang, (Director Industrial Economy Research Department of China Development Research Center), the country’s industrial revolution can be originally attributed to the third plenary session held by the 11TH Central Committee of the Chinese Communist Party in 1978 where it was agreed that China enters the reform and opening up era that spurred the industrial revolution process.

The system transition period of the country’s economy was mainly along the lines of developing such policy and reforms that would cure the severe growth imbalance among the various sectors of the economy. There was imbalance amongst the agricultural, light and heavy industry, power industries among others, making operation and development of the national economy impossible. Solutions were required.

Firstly, a planned, coordinated and intentional development of the agriculture, light and heavy industry sectors between 1978-1985 was initiated. It was perhaps observed that excessive prioritisation of one at the expense of others would not serve the economy. The oil, electricity, building materials, transportation industries were strengthened as their progress could easily kickstart development of other industries and resultantly the economy. Government undertook to support the textile industry through raw material sourcing and supply, adequate electricity and fuel supply among others. Government intervention is really crucial.

Comparatively, Uganda in its early industrial development stage, seems to suffer from an imbalance of the economy’s sectors. Uneven and uncoordinated support to some sectors at the expense of others nips the young industries in the bud. Efforts should perhaps be directed at fair and more purposeful allocation of the available resources across the board. Reports of inadequate supply of raw materials at the Soroti Fruit factory is a worrying observation that requires urgent government in survival of established industries if the industrial sector is to survive. In China, efforts were also directed at pushing manufactured products to the international market.

The opening up of the Chinese economy to foreign technology and economic ideas is another mechanism that served its purpose in the in the early stage of the nation’s industrial revolution. If implemented under the principle of equality and mutual benefit, foreign presence in Uganda’s industrial growth can be an invaluable step. In essence, Uganda needs to be wary of the danger of uncoordinated and imbalanced sectoral development if the industrial revolution is to bear fruit. China addressed this well.

A study of the Grant & Thornton Uganda overview of the 2022/23 national budget points to part of the problem. The disparity in allocation of sectoral expenditure resources is evident from the fact that whereas Works and Transport sector was earmarked to receive over Ush 4.3 trillion, their counterparts in the Trade and Industry sector were reportedly allocated a paltry Ush 418 billion. Without downplaying the role adequate infrastructure can play in industrialisation of a country, the imbalance in resource allocation shall result into an imbalance in the growth of the sectors and resultantly, the economy. A more equitable and fair allocation of the available minimal resources across the table would suffice in my opinion.

In addition, it may also be important to note that Jigang unequivocally notes that this first stage of industrial revolution succeeded due to the intentional and dedicated planning and commitment by the implementers of policies. A thorough and serious approach from government on its policies will determine to a large extent, the fate of the sector.

In conclusion, the idea is not to copy and paste China’s policies into the industrialisation process of Uganda as this would be a redundant approach however, there are effective policies and advise that both countries, who share thriving diplomatic relations may cordially exchange to the benefit of the latter.

Marvin Hannington Kalema is a Senior Research Fellow at Sino-Uganda Research Centre and a law student at University of Johannesburg, South Africa.

 

 

CNOOC Is Still Uganda’s Reliable Energy Partner Amidst EACOP Controversy

Posted on By Sino Uganda Research Centre

By Moshi Israel.

In International Relations, a country’s political and economic success largely depends on the friends or enemies that country makes. Uganda is no exception to this rule and so far, the Pearl of Africa’s closeness to China is proving to be a wise decision. Time as usual shall be the ultimate judge of this relationship. As President Museveni has occasionally hinted, the oil and gas sector is vital for Uganda’s long-term economic development strategy. The discovery of oil is not an event any country can simply ignore. It represents many opportunities as well as potential dangers. The most significant step is for Uganda to be ready for all these eventualities by making well-meaning strategic partners. China, through China National Offshore Oil Cooperation is likely to be such a partner in the energy sector for Uganda, (CNOOC).

 

Many Ugandans were alarmed and taken aback when the European Parliament passed a resolution on 14th September compelling Uganda and Tanzania alongside their partner TotalEnergies SE, to delay development of the East African Crude Oil Pipeline (EACOP) for at least a year citing human rights and Environment concerns. Whereas human rights and a clean environment must be top priority for every government around the world, the irony in this resolution cannot pass without notice. One needs to only check the list of countries from which the European Union imports its crude oil, solid fossil fuels (coal) and gas to assess the sincerity of the parliament’s resolution. Furthermore, it is important to remember that EACOP represents less than 0.1 percent of the operation global pipeline network of 1.18 million kilometers.

A closer look at the Kingfisher project by CNOOC, shows that Uganda is still on the right path to meeting targets with regards to environmental concerns, human rights through proper compensation and resettlement of persons affected by the oil project. CNOOC holds around 28.33% of the shares in the oil project alongside TotalEnergies SE (56.67%) and UNOC (Uganda National Oil Company), 15%.

In 2025, EACOP is expected to be online and the offloading of the first ship of oil is expected in the same year. CNOOC announced that it would invest USD1.6 billion in the kingfisher project with about $400m going to local providers. The Final Investment Decision (FID) was approved by CNOOC on 4th November, 2021 and on 1st February 2022, Uganda government announced the FDI. The Kingfisher oil field construction kicked off on the 11th of February 2022 and the oil field is expected to be ready for startup by the end of 2024. The main facilities on the kingfisher project are to include; 4 well pads, one Central Processing Facility (CPF), water intake station. Supply base, permanent camp, temporary camp, safety check station, 47.6km feeder line to kabaale including a high voltage cable plus road and other infrastructure.

As a researcher, over the weekend I visited CNOOC’s Kingfisher oil field project and from analytical perspective, CNOOC is doing a commendable job. The project has a plan for impact mitigation activities which involves stakeholder engagement activities. This is important because the plan which is already in practice seeks to quell doubts concerning the project by extending field visits to operation areas by key stakeholder groups such as special interests at all levels from national to the village level.

Additionally, CNOOC has an environment work plan designed to mitigate environmental risks caused by the project. The company completed an Environmental and Social Impact Assessment (ESIA) approval for a High Voltage Test Lab and feeder line ESIA in June, this year. The company also has an ESIA approval for Drilling Buffer Yard as of 14th July 2022. Also, CNOOC completed ESIA for shoreline protection system and jetty structure on 13th, July 2022. In August, the company rolled out the Monitoring and compliance register and a finalized legal compliance MS.

In context of jobs creation, the kingfisher project is currently employing over 2,715 Ugandans, which is over 78% of the total personnel. 280 total workers and 149 Ugandan nationals are directly employed by CNOOC and 2,436 by contractors. 524 of all the employees are from the local communities and there are 42 local subcontractors. These numbers are expected to increase as the project progresses.

CNOOC has also undertaken National Content activities aimed at benefiting Ugandans. These include supplier development engagements, enterprise development training programs that have trained over 150 small enterprises (SMEs) from the Albertine and Kampala regions with an additional 200 SMEs to be trained this year. The project has also implemented a community supplier development program to help farmers and small businesses to supply food and other items to the project. CNOOC has also trained and licensed 140 heavy goods vehicle drivers including a number of women. The project has facilitated training of over 126 trainers under its train the trainer program in Kichwamba and other vocational training institutes. Additionally, 230 welders have been trained and internationally certified in 2G and 6G coded welding.

When one takes a walk-through Kingfisher, it is easy to notice standard houses constructed by CNOOC for the locals who opted for this option instead of taking cash in resettlement money. The resettlement houses are up to standard with a kitchen, latrines and a tank collecting and supplying piped water purified by the company from a nearby stream.

In conclusion, the kingfisher project by CNOOC is a droplet of hope in an ocean of controversies surrounding the oil projects in Uganda. It is evidence that somethings can be done right. CNOOC is largely representative of Uganda’s partnership with China based on mutual respect and benefit for years to come. It is up to the Ugandan people and Government to make the oil project a blessing or a curse for the country. CNOOC is doing its part, it is up to the government of Uganda in collaboration with Ugandans and other stakeholders, to ensure that human rights are respected, the environment is protected and corruption not tolerated so as to alleviate some concerns from the international community.

It is also the responsibility of our international partners to make decisions based on facts and through research before taking a path that would destroy the livelihoods and shatter the dreams of millions of Ugandans, Tanzanians and East Africans likely to benefit directly or indirectly from the oil project.

Moshi Israel is a Senior Research Fellow at Sino-Uganda Research Centre.

 

CNOOC Doing a Commendable Work, EACOP Could be Turning Point to Uganda’s Economy

Posted on By Sino Uganda Research Centre

It is said that Kampala never sleeps, “the party capital of East Africa” any revealers call the city. But walking across the neon lit bar strips of Acacia and upper Kololo or the music blaring Bandali rise one can almost forget that this was unthinkable two decades ago. The neon lights would be flickering due to irregular electricity supply, the sounds of music blaring over the streets would’ve been drowned by coughing generators one spasm away from the dark abyss of load-shedding. Uganda like many other African countries was facing an energy crisis where the industrial and domestic need for electricity far outpaced the ready supply. To address this the government decides to construct the famous Owen Falls Dam at Bujagali.

This project initially funded by the world bank soon quipped the interest of foreign “environmental and climate” activists who pens blazing launched a scathing attack on the project lobbying both local leaders and politicians as well as unleashing a tirade of international pressure forcing the original contractor to (at great cost) pull out of the arrangement. Eventually the Owen Falls Dam was completed at a significantly greater cost to the Ugandan taxpayer and a less favorable Private-Public Partnership agreement than was in place earlier. However, the neon lights on Kanjokya street every night are a reminder that the Bujagali dam project is paying off.

Why do I bring this up now? For over a year now the East African Crude Oil Pipeline has for over a year now been under attack from a similar ilk of foreign “environmental crusaders” who are using all tools at their disposal to stall and stop the project. The latest weapon in their arsenal is a resolution by the European Parliament to compel Uganda, Total Energies and the China National Offshore Oil Company to stall the pipeline project by at least a year as they carry out among other things a secondary impact assessment study.

Besides the fact that it feels quite tone deaf that at a time when the shifting power dynamics within the Commonwealth establishment have reinvigorated the discussion on colonialism and neo-colonialism a group of (largely) former colonial powers comes together to pass resolutions “compelling” African countries to do their bidding, it seems objectively bordering on double standards because the same nations are urging the OPEC organization to increase its gas output to make up for the Russian supply irregularities caused by the conflict in Ukraine. A little closer to home perhaps the European Parliament may be interested in debating the British oil companies fracking within the North East Sea and what impact that could have on the environment as well as Brussels backtracking on coal reduction targets.

Admittedly, there is need for African countries to watch their Carbon footprint especially when it comes to fossil fuels. What many critics decline to mention is that Africa’s contribution as a whole to the global carbon footprint is close to negligible. As International Energy Agency’s executive director Fatih Birol noted; “if we make a list of the top 500 things, we need to do to be in line with our climate targets, what Africa does with its gas does not make that list.” Truly when one looks at the world’s largest emitters of greenhouse gas Uganda and Tanzania are no where close to the biggest threats to the Sustainable Green energy goals.

Most importantly, European countries should pick a leaf from the Chinese development assistance policies which are infrastructure oriented and non interventionist rather than dictating the course of sovereign nations. In a glaring contrast, while European “climate czar” Frans Timmermans and European members of Parliament debate the energy policies of the country the Chinese ambassador to Uganda H.E Zhang Lizhong was over the weekend at the Kingfisher oil field in Western Uganda to oversee the tremendous work of the CNOOC in setting up oil infrastructure that will be used in the project.

In a viral picture he is seen with a Ugandan female oil engineer, Kahwa Lucy formerly on Chinese scholarship now working at the oil site, a diplomacy masterclass revealing China’s commitment to infrastructure capacity building in the country.

During the same tour, the ambassador witnessed arrival of more components of drilling rigs raising hopes that Uganda’s first oil is about to be seen. With CNOOC’s president Chen Zhuobiao, Ambassador Zhang Lizhong assured researchers and journalists who visited the site that all environmental related concerns raised by EU parliament had been addressed since they had been raised in environmental impact assessment studies. The ambassador also noted that it is unacceptable EU to use claims of environment and human rights in to delay important national development project.

In the long run, it is very possible that Uganda’s oil fortunes can be turned around to fuel a greener economy, it has been done before (albeit on a smaller scale) in countries like Egypt and more recently the United Arab Emirates. Currently the logging of forests for firewood and charcoal burning may pose a more immediate threat to the environment than an oil pipeline built to match global standards of environmental sustainability.

Anyway, tonight, because of the dauntless tireless turbines churning noisily in Bujagali, a few million lights are flickering in the entertainment Capital of East Africa, countless beacons of hope in the “dark content”. Perhaps the oil pipeline may just be the artery that pumps life into the Ugandan economy and awakens the “sleeping continent”.

Shemei Ndawula, is a Research Fellow at Development Watch Centre.