Baz Waiswa

Baz Waiswa

Why Ugandans Might Miss Out On Oil Money

In 1970s, current Minister of Finance, Planning and Economic Development Matia Kasaija was a budding farmer rearing about 2000 goats he dearly loved. The farmer in him decided that he should get a market and cash in on the animals.

However that market couldn’t be got in Uganda. A friend advised him that in Saudi Arabia, goats are on high demand. They worked around the clock to secure the market in the Arab world. Luckily they were successful. The buyers in Saudi Arabia however wanted about 20, 000 goats.

 Kasaija, who then was a civil servant, was overwhelmed by the demand, the goats on his farm were insufficient and would be depleted if sold all his animals. He was not about to sell all his goats. He had to find a way.

Together with his friend, they traversed the northern and eastern part of the country to get goats they would take to Saudi Arabia were the market was assured. From his own farm he surrendered 1500 goats and from their countrywide tour managed to assemble about 10000 goats in total.

They procured travel documents and in no time they landed in Saudi Arabia. However what awaited for Kasaija and his partner was a shocker. The buyer rejected the goats due to their poor quality, age and breed.

According to Kasaija, the buyer wanted young goats of about two to three months (those without horns), exotic breed and of a certain quality different from what Kasaija transported thousands of miles from his native Uganda to the Arab world.

Apparently Kasaija and his crony transported long horned old goats of what Ugandans call local breed. It was a heart breaking loss.  Kasaija learned his lessons the hard way and this is perhaps why he stuck to working with government, joined politics and is now a political leader and minister but not a businessman.

Kasaija’s story resonates well with the nascent oil and gas industry were Ugandans are eager to cash in by providing goods and services. Like Kasaija, many Ugandans intending to work within the oil industry are not fully aware of the demands of the industry especially the standards, type of goods and services preferred by international oil companies and their associates.

Another story is told by Tony Okao Otoa the head of local content at Total E&P of how a farmer in Buliisa approached the oil Exploration Company with an idea to provide them with beef.

Because Total wants to give opportunities to local farmers, the oil company offered to look at the facilities under which the farmer would use to slaughter the animals and deliver the meat. To their astonishment, the farmer had no abattoir, no truck to deliver the meat, basically the farmer fall short of the basic hygienic demands to work in the oil industry.

This lack of information about what is demanded by the oil industry predict doom for local companies and individuals intending to work in the moneyed industry. Already local companies are complaining that they are losing basic business deals to foreign companies. 

This is not only bad for local companies aspiring to work in the oil industry but the Ugandan economy. With this concern, oil companies are working with government to uplift local companies to meet the standards by providing information, capacity building and putting in proper communication channels.

Total’s Otoa says it is important for Ugandans to get ready now by training man power because this is not an industry that will have to wait for anyone once it takes off. He says Ugandans can learn from countries that have been through this stage. He advises that the oil business is for the long term and for people who dream big.

As Uganda nears production stage, oil companies operating in a joint venture are willing to help local companies build capacity. Abdul Kibuuka, public affairs and national content manager at Tullow Oil Uganda says some companies with whom they have dealt with are doing a good job.

He however says others local companies lack the required integrity to work in theindustry. He explains that they talk to such companies that fall short of the requirements while drastic measures are taken against those who deliberately default the practices of the industry.

“There are local companies that are flagships for local content. They have grown with the industry and upgraded their machines.” Kibuuka told an oil and gas convention in Kampala in April, 2016. He revealed that for a local company to get business must prove compliance including meeting statutory requirements like remitting NSSF savings and paying taxes to URA.

Emmanuel Mugarura, the Chief Executive Officer of the Association of Uganda Oil and Gas Service Providers says oil companies have helped them to move forward describing the industry as capital intensive and that some local companies wouldn’t have managed without the help of oil companies.

Jessica Kyeyune, the national content manager at CNOOC, one of the oil companies operating in Uganda, faults Ugandans in general who over the years have shown laxity to uphold standards.

“Look at the buildings falling every day, the substandard roads constructed. If only Uganda makes observing standards mandatory.” Kyeyune ponders. Tullow’s Kibuuka, speaking in support of Kyeyune, says standards required are basic only that the oil industry is stringent to compliance.   

Asked if local companies are ready, Mugarura gives a two edged answer of yes and no saying they need government’s support to do training and build capacity.  Finance minister Kasaija has pledged to support efforts to build local capacity.

The minister however lambasted Ugandans for being disorganized counseling that it is time to join hands and work together. “It will be a shame if foreign companies take everything away. People are sleeping but must wake up. My ministry is ready to listen to any proposal and suggestions.” the minister explained in an interview.

About $2bn has been invested in Uganda to date by joint venture partners and other exploration companies since 2014 and about $8 -10bn  estimated investment is required through the phase of production. Uganda boosts of 6.5 billion barrels of commercially viable crude oil buried in the earth of the Albertine grabben of which 1.2 to1.7bn Barrels is estimated to recoverable resources.

Following an Industry Baseline Survey undertaken by the joint venture partners, 15,000 estimated number of direct jobs will be created by the project. Recently Uganda announced it will construct and export her crude oil through the Indian coast to international market using a 1,443 km Length of crude export pipeline via Tanzania port of Tanga.

Another pipeline from Hoima to Kampala will be constructed to bring refined products to Kampala and distributed to local market. Other infrastructure projects to be undertaken include an airport, roads, hotels, hospitals among other. All these present business opportunities for local companies and people.

Tanzania Starts Teaching Oil And Gas Subjects

Soon after inking a fat crude oil export pipeline deal with Uganda, Tanzania is fast moving to start reaping from the development. The deal reached at in April will see Uganda export her oil through mainland Tanzania to the coast port of Tanga using the 1, 403km long pipeline.

In the same manner, Tanzania plans to build a gas export pipeline to Kampala to sell some of her gas to Uganda. And because of opportunities in both countries, Tanzania is racing to make a kill by putting in place the right infrastructures and equipping her citizens with the correct skills.

Recently Tanzanian authorities in the north-eastern Tanga region started sensitizing their residents on how they can be involved and benefit from the new regional crude oil export pipeline project snaking from Hoima in western Uganda to the coast port of Tanga.

The latest move responding to the two pipeline deals between the two friendly neighbors is that Tanzania will start teaching oil and gas subjects especially in their metrology course at the College of Business Education (CBE).

Prof Emanuel Mjema, the College of Business Education (CBE) director, speaking at the World Metrology Day commemoration in Dar es Salaam, said the oil and gas courses would provide the country with enough experts in measuring natural resources and help the nation to tap into the opportunities the sector presents.

“The subject of oil and gas has been added in the metrology course after the discovery of natural gas. The industrial products, which may be meant for exports should be tested and evaluated using measuring instruments of guaranteed accuracy.” He said.

He explained that the number of students who are taking the course is still very low but the profession remains with less competition in job market. He said all graduates get employed by the government after graduation.

Tanzania’s energy and minerals ministry revealed in a statement that several east African countries have asked to buy gas from Tanzania and that “the Tanzanian government plans to build a gas pipeline to Uganda.

Tanzania is believed to be having a total of about 60 trillion cubic feet (TCF) of recoverable natural gas reserves following a new discovery of an additional 2.17 tcf onshore near the capital Dar es Salaam in February 2016.

Oil Rich Hoima Gets $42m Sugar Factory

President Yoweri Museveni has commissioned a factory that will be producing 1,500 tonnes of sugar per day in Hoima district with a call for local farmers to adopt commercial farming to banish household poverty. The president speaking at commissioning of Hoima Sugar Limited in Kiswaza village, Kiziranfumbi Sub-County in Hoima District stressed that commercial agriculture will create employment opportunities

"For long, we have been using land for domestic farming but now is the time for modern farming. We need food but also money and jobs," he said, adding, "We are going to earn revenue from exporting the excess sugar to the neighbouring countries, employ more people, increase the number of out-growers and also generate electricity from the sugarcanes," he said.

Hoima district like other districts in the greater Albertine Graben in western Uganda are basking in glory of the oil and gas natural resource which was discovered in the area and awaits production. Because of this oil, many people are becoming reluctant to till their land waiting for the promised oil money. And with the delays to start oil production, many people who abandon farming are jobless with no food to eat or source of income.

The 8,000-acre estate will produce 1,500 tonnes of sugar per day and is expected to employ over 5,000 people once completed. Sugar production in the country is one of the fastest growing industries and contributes 25% of Uganda's Gross Domestic Product (GDP). President Museveni thanked the people of Hoima for availing land to the investors to construct the factory.

The Executive Director of Hoima Sugar Limited, Mr. Sarbhjit Singh Rajima, said the US$42-million dollar investment, is set to immensely benefit the local people in the area through employment and construction of schools. "We have 450 out-growers but expect the number to increase to 800 by the end of this year and 2000 by the end of 2017," he reported.

 

PHOTOS: Oil And Gas Convention Kicks Off In Kampala

The two day second oil and gas convention organized by Uganda Chamber of Mines and Petroleum (UCMP) has kicked off in Kampala at Serena Hotel with a call for local businesses and individuals intending to work in the oil industry to prepare for the opportunities that are springing up in nascent industry.

The conference being held under the theme, “Suppliers’ Roadmap to Operational Excellence”, is largely intended to reassure suppliers and subcontractors about the opportunities in the oil and gas sector amidst the tough industry challenges.

The convention has attracted a cross section of oil and gas industry players

Speaking at the opening of the convention, Elly Karuhanga, the chairman of Uganda Chamber of Mines and Petroleum emphasized that the time is now to prepare to work in the industry. He said that with work going on to construct a refinery and a decision made on the crude export pipeline route, Uganda is getting closer to oil production.

“This is not a dream, your level of preparedness should be measured now. We have said this five years and we are saying it now. We are seeing signatures being made then why should you grow cold feet. If you could invest in the industry five years ago why not now?” Karuhanga said questioningly.

Frank Ssebowa the executive director of Uganda Investment Authority addressing the convention

Karuhanga noted that the wait has been long and the delays on the side of government were dramatic leading many investors to lose money and hope. This was not made any better by the fall in prices of crude oil on the world market which led to investors cutting their expenditures.

“Oil prices dropped from the roof and as a result there was worldwide investment cuts. Many employees were laid off. Many oil companies in the region counted their losses and wound up. The enthusiasm in the industry which had been created was smashed and the industry became a scare,”

Elly Karuhanga the chairman of UCMP following proceedings at the convention

Delays to enact regulations to guide the laws that had been passed by parliament was another industry disturbance that Karuhanga noted. While there has not been much activity in the industry in the past year, this year is promising. Oil companies Total E&P and Tullow are expecting to get their production licenses.

Six more oil companies are expected to make an entry into the country to explore for more in the great albertine region in Western Uganda. Construction of the refinery and the oil pipeline is also expected to get underway this year.

Some of the participants attending the convention

 During the Northern Corridor Heads of State Summit meeting in Kampala recently Uganda announced it will build a crude oil pipeline route through Tanzania to Tanga port from Hoima while Kenya will build theres from Lokichar to Lamu port.

This means that East Africa will have crude oil export pipelines, a decision Karuhanga described as unprecedented and the opportunities it offers as ‘simply humongous’. He said that suppliers can now bid for business both in Kenya and Uganda.

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