Earth Finds

Earth Finds

Huawei To Train Top ICT Uganda Under-Graduates In China.

Huawei, a leading global ICT solutions provider, has today partnered with the Ministry of Education and Sports to launch the 2018 edition of the Seeds for the Future Program.

The program that selects top college students in ICT-related courses for a study trip in China was launched at Huawei’s Representative Office at Kisementi in Kampala and is to take place for the third time. 

Speaking on behalf of the Permanent Secretary of the Ministry of Education and Sports Mr. Muzanilu Mukwatampola, the Acting Commissioner for Higher Education in the Ministry lauded Huawei for the program. 

“On this note I thank Huawei for allowing us to be a part of this initiative that has benefited Uganda’s education sector through knowledge transfer, enhancement of teaching and scientific research capabilities, exposure to the newest technology trends and provision of high quality courses and opportunities for hands-on practice”, he said.

The program that was flagged off by H.E. Yoweri Museveni began in Uganda in 2016 with 10 ICT talents visiting China in Beijing and Shenzhen.

In 2017, 10 more students from the various public universities of Uganda participated in the same training; in the Chinese culture such as language, calligraphy, painting learning, historical tour in Beijing and cutting-edge ICTs lessons, enterprise management experience sharing, lab practices, Huawei exhibition hall visit and solutions demonstration in Shenzhen, where Huawei’s headquarter is located.

According to the Managing Director of Huawei Mr. liujiawei “Out of the 10 students that went to China last year, one has been offered employment in Huawei known as Maria Drolence, Maria Angella Namuleme was offered internship to continue training with our Uganda office, other three were offered employment in other companies and others continued with their studies.”

“Our focus this year is to have the top 10 ten students out of the 35 forwarded by all government of universities of Uganda. In our most advantage labs, they will keep their fingers on the pulse of technologies to explore for the future where digital technology is taking us”, He added.

10 students selected by their proposals required for the program shall leave for China on 6th April for two weeks.

The Deputy Chief of Mission Chinese Embassy to Uganda Mr. Chu Maoming noted that the program is a good example of Chinese companies carrying out win-win cooperation fulfilling the wellbeing of all Ugandans through Corporate Social Responsibility. 

“Seed is a symbol of life, future and hope. Talent is the key factor to the growth and development of any industry. The “Seeds for the Future” Program initiated by Huawei is actually a very good example of Chinese companies carrying out win-win cooperation and fulfilling corporate social responsibilities in Uganda. I am sure that this Program will not only plant the seeds of ICT, but also seeds of China – Uganda friendship and cooperation”, He said 

The Seeds for the Future program was initiated in 2008 by Huawei with over 280 universities globally taking part.

Understanding Cost Recovery In Uganda’s Petroleum Sector

By Ali Ssekatawa

The cost management framework for Uganda’s oil and gas sector is based on the Production Sharing Agreement (PSAs) which is one of the four (4) major types of petroleum regimes between International Oil Companies and Host Governments.

The choice of regime depends on various factors including the availability of risk capital for investment, given that petroleum exploration is high risk and capital intensive, more so in virgin basins where no discoveries have been made. This was the case for the Albertine Graben prior to 2006 when Uganda’s first commercial discovery was confirmed.

Types of Petroleum Agreements/ Fiscal regimes

One of the four is a Concession Agreement, where the company acquires the right to explore and develop petroleum resources at its sole risk and agrees to pay royalties and income taxes to the host government.

The company has control on production rates and marketing, therefore the government grants title to resources to company and collects taxes and other fees. Iran, Nigeria and Chad have used concessions.

Service Contracts are mostly used in countries with huge proven reserves, such as Saudi Arabia. The oil company finances and operates petroleum operations and receives fees for their services, either in cash or in kind. The entire risk is borne by the country and the title to the petroleum resources oil belongs to the country.

Joint Venture Agreements where both the host country and the oil companies share the risk and provide the required capital for exploration, development and later production. Kuwait and now Venezuela use these Agreements.

Production Sharing Agreements

Production Sharing Agreements were first used in Indonesia in the 1960s and are common in developing countries that do not have the risk capital to invest in petroleum operations.

In these agreements, the government contracts an oil & gas company to finance and undertake petroleum exploration, development and production operations.

The company receives a proportion of oil/gas production for the recovery of their costs and for a share of the profits. Uganda runs a hybrid PSA regime where in addition to cost oil and profit oil, the licensees pay royalties and other fees as prescribe by law.

The key features of Uganda’s and most PSAs include:

  • The oil company is a contractor to the host government.
  • Cost recovery begins when production starts
  • Host government and contractor share in production
  • Provision for sharing of profit oil
  • The contractors’ share of profit oil is taxed.
  • The contractor is required to provide technology and financing; exploration and development expenditures are met by the contractor
  • The title to any goods and equipment brought into the country passes to the government
  • Ring fencing of costs, i.e. costs incurred in one contract area cannot be recovered from production from another contract area
  • Ownership of the resource remains with Government.

It is important to appreciate that no two PSAs are alike and various combinations of features can be adopted depending on the legal framework, negotiations between the government and the oil company, and the geological risk profile. Uganda currently has seven active PSAs with five oil companies.

The advantage of the PSA regime for a developing country like Uganda is that the financing risk is borne by oil companies and the title to petroleum remains with Government.

Government also approves production rates and profiles, how the resources are commercialised (refining and/or export), monitors the expenditure by the company to ensure efficiency in operations, and approves recoverable costs.

Determining and Monitoring Recoverable Costs

In Uganda’s PSA regime, a company will only recover the exploration and development costs after a commercial discovery is made and production is undertaken. If no discovery is made (as was the case in EA 5 and EA 4b whose licenses expired before discoveries were made), no recoverable costs are due to the company.

For areas where discoveries are made, companies recover their costs over a period of time and the amount to be recovered is capped for each year at a certain percentage (say 60%) of revenues. Therefore, a company cannot recover all its costs in one year and this enables government to receive revenue from the onset of production.

Additionally, in Uganda, before the amount to be recovered each year is calculated, the gross revenues are subject to a royalty payment to Government which ranges from 5.5% to 18%.

Government will therefore receive a royalty payment each year before the recovery of any investments costs by the companies and will also earn its share of profit oil and taxes during the time the company will be recovering its investment costs.

The type of costs which are recoverable include all Capital investment in Exploration, Development, Production and Operating expenditure approved by the Petroleum Authority of Uganda (PAU) and audited by the Office of the Auditor General.

Uganda’s Petroleum Regulations and the PSAs provide for an Advisory Committee comprising of representatives from the PAU and the licenses that reviews and approves the oil company annual work programmes and budgets.

Any changes must be submitted for approval. The work programmes are monitored by the Authority (previously by the Directorate of Petroleum in MEMD) to ensure alignment with approved budgets and plans.

This also includes approving contracting strategies and organisational structures to ensure compliance with the laws and that Ugandans and Ugandan businesses are given priority.

In addition to Monitoring, the Authority holds regular operations meetings with the licensees and ensures submission of detailed reports and the geoscientific data acquired in order to carry out its independent assessment of the work undertaken.

Approval for expenditure does not amount to approval of costs for recovery since the expenditures have to be audited. The licensees submit their annual statements of expenditure to the PAU and these are examined by the Auditor General who gives final approval of which expenditures are recoverable.

This means that any cost overruns that were not approved by the PAU cannot be recoverable. Indeed, from the cost recovery Audits for petroleum operations for 2001 to 2011 undertaken by the Auditor General, close to USD 40 million was determined unrecoverable due to non-compliance with the provisions of the PSAs.

The PAU will and continues to ensure that the oil and gas operations are undertaken in an efficient manner and in compliance with the country’s laws and regulations, and will work closely with the oil companies and the Office of the Auditor General to achieve cost efficient operations so that Uganda’s oil and gas resources create lasting value to society.

Mr. Ali Ssekatawa

Director for Legal and Corporate Affairs

Petroleum Authority of Uganda

EnergyNet, African Business Ink Africa Energy Forum Partnership

Celebrating 20 years of projects, deals & partnerships, the Africa Energy Forum will celebrate its 20th anniversary in Mauritius from 19-22 June.

EnergyNet and African Business have joined forces in 2018 to produce the annual Africa Energy Yearbook and a Special Energy Report on African energy for global distribution

As the official publication of the Forum, the 9th Africa Energy Yearbook will reflect on the achievements of Africa's energy sector over the last 20 years.

It will have a special anniversary edition examining the role which the African power community has played in these successes.

Content from the yearbook will also be compiled into a Special Energy Report to be published in African Business magazine and circulated throughout the magazine's global distribution network.

The report will feature a number of CEO interviews, thought leadership pieces and in-depth analysis on a number of energy-related issues that are shaping the African continent.

Distribution will reach 300,000 readers at business lounges and newsstands in over 75 countries.

Africa Oil Week: Prospect Forum To Create Platform For Opportunities

This year’s Africa Oil Week yet again provides the continent to deliberate on the possibilities of developing their natural resources. The annual meeting in south Africa has over the year’s provided a platform for governments and private sectors to forge a way for the development of oil and gas.

At the Africa Oil Week, happening later this year 5th - 9th November 2018, the Prospect Forum will bring together exploration and production companies and government under one roof in an attempt to develop new business partnerships.

This attempt is driven by stable and more predictable crude market averaging at $60 per barrel. While it is unknown what the global crude oil prices will be when the meeting gathers, the $60 mark is good news considering the markets had been battered to below $50 per barrel.

“The Prospect Forum at Africa Oil Week is designed to support both B2G and B2B transaction in exploration and production in the Oil and Gas Upstream sector.” Said a note in an email calling for members to register for the Cape Town industry gathering.

Apparently, the Prospect Forum, held in partnership with AAPG, welcomes 12 presentations over 3 days to highlight some of the most compelling new E&P activities in Africa.

Presenters from National Oil Companies, Independents and Geoscience companies will have the opportunity to present bidding rounds, farm-in prospects and basin data viewing respectively, the email further said.

This new content stage is a unique business platform that provides a catalyst for business development, new partnerships and collaboration, the promotional email explained.

It added: Within the Forum, stakeholders will have the opportunity to meet the Heads of New Ventures, VPs of Upstream, VPs of Business Development, Heads of Exploration and senior leaders who form the decision making process for exploration and production companies across the value chain.

“If you are looking to engage with stakeholders who control assets or acreage, then showcasing at the Prospect Forum offers you a fast track to new business development opportunity.

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