Managing the expectations of host communities in oil-rich areas By Chris Musiime

1. Managing the expectations of host communities in oil-rich areas By Chris Musiime Managing Editor-Oil in Uganda www.oilinuganda.org Everyone is talking about oil. We capture the whole conversation.

2. The Act defines host communities as “inhabitants of the district in which petroleum activities take place.” These ‘inhabitants’ are excited about the discovery of oil in their area and are expecting to take a share of the proceeds- a significant share. They have not been educated about things like PSAs and any other arrangements the government may have with the operators so they rely on politicians and other individuals for information-sometimes incorrect information. Everyone is talking about oil. We capture the whole conversation.

4. They are now convinced that they own the oil and gas resources and hence expect an immediate dividend even before production begins. This desire is enhanced by their economic status because most of them are poor. A recent study by International Alert found that 22% of the households in the Albertine Region earn less than $20 a month. Everyone is talking about oil. We capture the whole conversation.

5. In that same study, respondents reported that oil exploration activities had affected the way they meet the needs of their families. Everyone is talking about oil. We capture the whole conversation.

6. For example, 54% of them reported increased restriction to fishing activities.

7. Everyone is talking about oil. We capture the whole conversation. There is a need to strike a balance between the expectations of the government, the oil companies and the local population. The expectations of the government and the oil companies are clear and justified, because most of them are detailed in the PSAs and other documents.

8. But the expectations of the host communities are not uniform. They vary, and the leading ones are: • Jobs • Business opportunities • Good health facilities • Good roads to transport their produce Everyone is talking about oil. We capture the whole conversation.

9. Quality, free education • Cheap fuel and transport fares, etc. Everyone is talking about oil. We capture the whole conversation.

10. But even within the host communities, there are different groups that expect special treatment. For example, the Uganda Wildlife Authority, which owns the national parks and game reserves where most of the wells are located is asking for 3 % of royalties. The Bunyoro Kingdom also wants 12.5% of the same royalties. Everyone is talking about oil. We capture the whole conversation.

11. Sir Andrew Cohen and Omukama Tito Winyi sign the 1955 Bunyoro Agreement. Art. 36:In the event of any mineral development taking place, a substantial part of the mineral royalties and the revenues from mining leases shall be paid to the Native Government of Bunyoro-Kitara.

12. In Pakwach, the Mayor told me he was lobbying for Nebbi District to be split so that Jonam-the area comprising the sub-counties of Pakwach, Panyimur and Alwi— gains administrative status as a district. That way, local government’s eventual share of any oil revenue will fall within his patch. Everyone is talking about oil. We capture the whole conversation.

13. Then there are those people who face eviction from their land in Hoima District where the refinery is to be set up. They expect more money than what the government is promising. At the same time, most of them expect to get jobs in the refinery even after they have been compensated. They therefore expect to either buy, or be given land near the development. Everyone is talking about oil. We capture the whole conversation.

14. All these expectations need to be managed. As we have seen in some African countries, failure to efficiently manage the expectations of host communities leads to undesired resentment for the oil companies operating in those areas. In extreme cases, the locals end up targeting those projects. It also seriously impacts on the popularity of the political leadership. In the next slides, I outline some remedies. Everyone is talking about oil. We capture the whole conversation.

15. Communication and awareness The communities need to be educated about the oil and gas industry, how it operates, what is possible and what is not. Dispel the illusion that the industry is like a very huge construction site where every able-bodied individual is assured of a job as long as he or she expresses interest. The government has developed a Communication Strategy which needs to be applied. For now, the communities are relying more on the oil companies’ liaison officers because they see the government officials much less often.

16. This also goes with constantly updating the communities. I was surprised while on a visit to Rhino Camp in Arua last year to be told by some of the elders there that Neptune had found oil and would return to resume production soon. One man even told me that he had read in the papers that Neptune had hit dry wells but he was convinced that the media was misleading Ugandans. Such people obviously need to be told the truth. They deserve an explanation on what transpired with Neptune and what will happen in the near future.

17. “Top secret,” says Abdul Nasser The dry Avivi -1 well that was plugged and abandoned by Neptune in Rhino Camp Everyone is talking about oil. We capture the whole conversation.

18. Training Be seen to be making special considerations for the host communities because right now , they feel “outsiders” are being trained in oil and gas professions. Some are questioning how scholarships are awarded. Foundation stone at the Kigumba Petroleum Institute Everyone is talking about oil. We capture the whole conversation.

19. Support the communities to earn from the oil industry The government must come out strongly on local content. The legislation relating to the 48% local ownership of goods and service provision companies has been received with scepticism – but something similar needs to be done for small scale entrepreneurs in the host communities-as soon as that capacity is attained. For example, Traidlinks has an ongoing partnership with Hoima District Farmers Association (HODIFA) to mobilise local farmers in Hoima to grow vegetables to supply to the oil camps. Everyone is talking about oil. We capture the whole conversation.

20. Mrs. Byaruhanga supplies cabbages to oil camps

21. HODIFA has a membership of 6000 farmers, imagine if half of these would be supported. Some of the farmers are complaining that the oil companies are buying food from Kampala , but they need to be explained to why it is so, and supported to qualify as suppliers to the oil industry. If similar organisations like Traidlinks are supported by government, some of this produce can even be exported. Everyone is talking about oil. We capture the whole conversation.

22. Be strong on transparency There is a fear amongst the communities that oil money will not be used to improve their living conditions, and most of it will be “stolen” by government officials. The government MUST be seen to be committed to proper utilisation and allocation of the oil revenues, and MUST take a firm stand against corruption. Everyone is talking about oil. We capture the whole conversation.

23. Proper use of oil money in itself is a good start to managing public expectations because it will stimulate government projects within the communities and improve, or rehabilitate, basic infrastructure. When people start seeing real change in their way of life, they will begin to appreciate the oil and gas industry. Everyone is talking about oil. We capture the whole conversation.

24. Set up meaningful CSR projects Corporate Social Responsibility (CSR) is an ongoing business strategy which can be used to support the host communities. In some communities, there is criticism for the projects that the oil companies have set up, while in others, there is unanimous gratitude. These projects can be used to show the communities that the oil companies, and government, are committed to improving the welfare of the communities.

25. Heritage set up this school in a very difficult terrain

26. Research: Understand the communities you are working in-what are their income sources and levels, what are they lacking, what do they need most desperately? You may construct a borehole, when clean water is not the most urgent need of the community. Everyone is talking about oil. We capture the whole conversation.

27. Consult: Talk to community leaders, and members of the community, vulnerable groups-like women. Get their views on what they need. Establish where the community would like the project to be-don’t only rely on district leaders and government alone. Everyone is talking about oil. We capture the whole conversation.

28. Communicate: Keep an open channel with the community through the community liaison officers. Respond: Keep close to the community, listen to their queries and respond accordingly. Everyone is talking about oil. We capture the whole conversation.

29. Everyone is talking about oil. We capture the whole conversation.