if you have sided with the government (i think thats if you've done the first 2 missions for juan rebenga) then olvega should be hostile. i have never done that myself so i'm just guessing here. the people in olvega are rebelling against the governmant after all.
this might also happen if you are wearing uniforms of the army (not the rebel forces) when entering olvega.
if you choose to work for tanya tormens and the rebels instead, olvega won't become hostile and you can do some missions to recruit the olvega forces for tanya.
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