Farmers in the oil-rich Bunyoro sub-region had hoped that supplying food to companies involved in the oil and gas sector would put money in their pockets but many years down the road, there are no signs of this happening soon.
Monica Kabatoro, the chairperson Hoima District Farmers Association (HODFA), in an April 22, 2022 petition to Bunyoro Parliamentary Caucus, expressed dissatisfaction with the way farmers’ attempts to participate in the oil sector have been frustrated.
The petition, a copy of which The Albertine Journal has obtained, is copied to Robinah Nabbanja, the Prime Minister, and district chairpersons from the region.
“If poor farmers of Bunyoro cannot be allowed to sell their mangoes, amaranthus (dodo) and sweet potatoes in the available oil market, then what is it in oil and gas sector for them?” Kabatoro asked.
This comes at a time when there is a surge in demand for agricultural produce to feed the workers in oil camps as Uganda embarks on the development phase to extract its 6.5 billion barrels of oil.
There are allegations that service providers, oil firms and the sector regulator employees are sidelining local farmers from selling their produce to feed the workers of companies in oil and gas related activities.
The farmers say that the sector regulator -Petroleum Authority of Uganda (PAU) – is not doing its supervisory role to ensure catering service providers to oil firms adhere to local content requirements by purchasing food from Bunyoro farmers.
“We want answers as to why firms hired to provide catering services are sourcing foodstuffs from outside the oil region when local farmers can supply the same,” Moses Byenkya, a coordinator for HODFA said.
Meanwhile, some commentators have cited failed government commitment to enforce national and local content to have exacerbated the plight of the Bunyoro farmers.
There is also lack of commitment from the local leadership and absence of a critical mass at local level to have conspired to facilitate this exclusion.
“We should look at the process of getting contracts to supply the oil industry. Preparations of farmers on standards, whether they are protected by the law. It as well starts with having a company registered and pre-qualified on the National Supplier Database (NSD),” Janepher Baitwamasa, an administrator at Navigators of Development Association (NAVODA), a local organisation that advocates for good governance of natural resources, said.
The Process for certification
Baitwamasa explained that the applications are made online via the website of PAU.
Upon submission of the application and the requisite documents including the National Social Security Fund (NSSF) contribution certificate and tax compliance (Tax Identification number), the verifications are done and the enterprise is listed on the NSD.
Baitwamasa said the process is hectic, requiring one to be computer literate yet almost 98% of farmers have little knowledge of computers.
She added that besides the PAU system is up and down and the required standards are too high which do not favour local community groups.
Baitwamasa said the crisis arises from a general lack of capacity including capital as oil is investment intensive, skills to produce quality commodities in the needed quantity and the process for certification of farms as standards cannot be compromised.
Any incident of food poisoning could lead to litigation and cancellation of the suppliers’ contracts.
So, farms must be certified which involves experts visiting to assess sanitation standards, pest management within acceptable methods regarding proper chemical application etc.
Certification locally is done by the crop inspection and certification department at the agriculture ministry to provide assurance in quality.
The crop inspection and certification department, is the one internationally recognised for, among others, hazard analysis and critical control point (HACCP) and international standard organization (ISO 9001).
HACCP is a global standard on food handling processes considering where the food comes from, its storage, preparation and service.
This is to ensure that food is kept free from the risks of harmful bacteria, chemical contamination and other foreign objects.
Local content in food supply
Uganda’s oil production sharing agreements (PSAs) have clauses dictating that preference should be given to goods produced or available in Uganda and services rendered by Ugandans and Ugandan firms.
These include agriculture, transport, security, foods and beverages, hotel accommodation and catering, human resource management.
The others are office supplies, fuel supply, land surveying, clearing and forwarding, crane hire, locally available construction material, civil works, supply of locally available drilling and production materials, environment impact assessment, communication and information services and waste management.
Local content is tied on the subsequent renewals of contracts and it is supposed to be closely monitored by the sector regulator to ensure companies and their service providers are incorporating it within their petroleum activities.
However, oil firms and their contractors are hesitant to source food from non-certified sources because of high risks of health accidents.
Certification involves the issuance of a certificate or mark to validate that a specific foodstuff meets defined standards set by HACCP and ISO 9001 or 22000, among others.
The requirements are even more stringent for foodstuffs like meat which calls for very high standards of handling where sometimes consumers prefer seasoned meat kept in cold chain at a recommended temperature of negative five degrees Celsius to kill insects, viral diseases and bacteria.
There is a general shortage of such facilities to certify farms and train farmers on standards in the oil-rich region.
Bunyoro sub-region only has HODFA, Masindi District Farmers Association (MADFA) and Hoima Caritas Development Organisation (HOCADEO) that have a group approach to train farmers.
“That shows how many people are excluded along such technicalities or if taken, there are fewer local firms despite agriculture or farming being an engine of growth and if well harnessed would create more jobs,” Baitwamasa said.
How farmers were frustrated
Kabatoro said efforts to strike a deal for small holder farmers in Uganda’s oil economy began in 2010 when HODFA under the guidance of Trias, a Belgian organization, approached Tullow Oil Pty which was conducting exploration requesting for an opportunity to allow them supply food to their camps.
Tullow which later firmed down its assets to China National Offshore Oil Corporation (CNOOC) Uganda Limited and French firm Total Energies plc, then raised the issues of quality standards and consistency of supply.
In 2011, Traidlinks, an Irish firm was hired by Tullow to build capacity of farmers in business negotiation and development with HODFA, MADFA and HOCADEO taking the lead in mobilising and training farmers.
The first pre-test was done on July 12, 2012. The farmers started supplying foodstuffs to Tullow operated camps in Buliisa and Kisinja to Equator Catering Company.
Kabatoro said they saw some promise for two months but despite being consistent in quality and quantity, frustration began when Equator Catering Company began placing orders that made no economic sense to farmers.
“For example, we were told to deliver 10 kilogrammes of mangoes from Masindi district and 10 cabbages from Kikuube to the collection centre in Bujumbura in Hoima City,” she said.
The HODFA Chairperson said the catering firm started claiming that they were not meeting food safety, hygiene and quality management and standards.
In a bid to reach a compromise, Kabatoro said HODFA requested the catering firm and PAU to make available code or set standards to build the capacity of farmers.
“Unfortunately, the standards have never been availed to us,” she said.
In their attempt to tap the petrodollars they (HODFA) engaged NORGAM, a company which had staff and farmers trained in global gaps and ISO 9001 but HODFA failed to meet the costs of certification since business was not viable.
After the signing of the Final Investment Decision (FID) on February 1, 2022, farmers again mobilised under HODFA and MADFA to prepare for the big boom.
Each farmer was tasked with contributing sh100,000 towards the refurbishment of the farmer owned food collection centre, processing and handling facility at HODFA offices, West Division, Hoima City.
After renovation of the facility, GCC Services limited, a Dubai based company, that was hired by McDermott to provide camp management, catering and support service to the Tilenga project facilities sent their quality assurance team that were amazed with what they found, noting that it was beyond their expectations.
PAU also visited and they shared with them food quantity projections, demanded for price quotations and agreeable prices.
She says on April 13, an abrupt phone call came in at 4:30pm informing the coordinator on how a Local Purchase Order (LPO) was being processed and that food will be needed in Buliisa, the following day at exactly 10:00am.
Farmers were promptly mobilised and unexpectedly to the officials, food was delivered on time and in stated quantity.
Kabatoro disclosed that repeat test requests received superb response including on the last day when a notice of two hours was given to make food available at the centre which Bunyoro farmers passed with flying colours.
In spite of this consistency, Kabatoro says, on April 21, 2022, an outburst “no more buying food from HODFA. Your prices are too high,” message came which shocked the entire Bunyoro farming community.
The farmers requested GCC Services limited to share their preferred prices quotation but it took a serious exchange of words, after which a frustrating list came on April 23, 2022.
With these events, Bunyoro farmers concluded that they were being technically and deliberately excluded from the oil discovered in their region.
They allege that although the service providers give excuses that food sourced from the region is of low standards, they (service providers) transport and deliver food from outside Bunyoro in dirty trucks and claim that it is bought from within Bunyoro sub-region.
The farmers’ issues of contention include ambiguous standards which are not made available to them and blackmail through abrupt placement of orders.
The Bunyoro famers want to be allocated 48% of the required food supplies and PAU to increase its supervisory role to ensure local content by the service providers is adhered to.
The farmers want PAU to investigate issues of pressing for prohibitive prices intended to make oil look unprofitable to the local people compared to the ordinary market.
“For example, a tray of eggs being supplied at sh8,000, while on open market is sh9,500 with terms of payment being cash for the latter while for the former is 60 days after delivery. Placing orders of very small quantities that make no economic sense for any serious person to engage in and delivering the bulk of food demands from places beyond Bunyoro,” complained Byenkya.
“We need to know why besides they take long to pay because this further discourages farmers,” Byenkya, added.
The farmers petition asked Bunyoro parliamentary caucus to sermon oil companies-Uganda National Oil Company, CNOOC Uganda limited, TotalEnergies plc and service providers; MSL Uganda Limited, Equator Catering and GCC Services limited- to explain the mess.
The farmers want GCC Services limited to declare the volumes of food they project to consume monthly and annually starting from 2022 to until its six-year contract runs out.
They also want the current source of food being consumed in camps like Buhuka, Buliisa and Kasenyi alias Tilenga be availed.
They have asked the sector regulator and oil companies to collaborate with Uganda National Bureau of Standards (UNBS), a body responsible for regulating standards to make oil and gas food safety and quality management standards available to the public.
“The government can support the strengthening of local private initiatives like the one of HODFA and Muhumuza-Kubalirwa abattoir in Buliisa to meet international standards,” Byenkya said on behalf of the farmers.
The farmers want government through PAU and Ministry of Agriculture Animal Industry and Fisheries (MAAIF) to support training of all extension staff in the sector in food safety, quality management and standards needed by the oil sector.
Speaking in relation to the farmers’ petition, Hoima City Woman Member of Parliament (MP), Asinansi Nyakato, told The Albertine Journal that a meeting was caused with PAU Executive Director, Ernest Rubondo and Ministry of Energy officials in Kampala where they promised to take immediate action on the matter.
Nyakato who could not readily provide details of the meeting, said she was dismayed to learn that the duty bearers had taken long to address farmers’ concerns and ensure renewal of their tender to enable them benefit from the opportunities in the sector.
“Oil can never have meaning without the involvement of locals. They are the ones to be negatively affected by impacts of its extraction. Farmers have had enough of genuine concerns which must be expeditiously addressed,” Hoima City female legislator who also doubles as the shadow minister of energy and mineral development in parliament, stressed.
But the accused entities have been on the defensive whenever such issues are raised during local content forums.
Efforts to get a comment from GCC Services limited Chief Executive Officer, Rashad Sinokrot were futile.
Sources told The Albertine Journal that following several complaints by the farmers, PAU has since summoned oil companies and McDermott and told them to ensure local content is a met.
A virtual meeting between PAU, oil firms and service providers has also been scheduled for November 2, sources told The Albertine Journal.
Another source said McDermott, the main contractor in return summoned its sub-contractors-MSL which is Kenyan originated and GCC Services limited and ordered them not to source for food from outside the region anymore except with clear justifications.
Betty Namubiru, National Content Manager at PAU told The Albertine Journal on October 20 that they had started the process to address the farmers’ complaints.
“Call me later at 5:00pm and I give you details,” Namubiru said, though later she could not pick calls to her known mobile telephone contact.
Tonny Otoa, the Chief Executive Officer for the Stanbic Business Incubator in Hoima City established to train farmers in agronomy and standards, in a media opinion article on April 18, 2022, said there is need to double efforts and go beyond supplier development forums.
He called for clear articulation of opportunities, noting that small businesses needs support through business linkages.
Otoa implored that contractors be pushed harder and companies compelled to have signed contracts to make sure what is stated in the bidding documents is adhered to.