AfDB Approves €8m Technical Assistance Grant To Support Rwanda's Ruzizi IV Hydro Power Project

The Board of Directors of African Development Bank Group has approved an €8 million grant drawn from the European Union's Africa Investment Platform (EU-AIP) to support the preparation of the Ruzizi IV Hydropower Project. The plant will be situated on the Ruzizi River between Rwanda and the Democratic Republic of Congo and will supply electricity to the DRC, Burundi and Rwanda.

When completed, Ruzizi IV is projected to produce 287 MW of electricity and exploit the Ruzizi River's full hydropower potential. Two power plants are already in operation: Ruzizi I produces 29.8 MW and Ruzizi II, 43.8 MW; a third, Ruzizi III, with a projected 147 MW output is under development with Bank support.

The project will provide electricity to millions of households, as well as small and medium-sized enterprises and industries, thereby improving the living conditions of the regional population. Greater and more reliable access to electricity will also improve the quality of basic social service delivery including health, education, and improved security.

"The African Development Bank played a major role in structuring and raising financing for Ruzizi III, and the lessons learned will be used to successfully develop and implement Ruzizi IV. The use of renewable and affordable electric power will help to reduce poverty, unemployment, greenhouse gas emissions and deforestation, as well as stabilise security in the Great Lakes region," said Batchi Baldeh, the Bank's Director for Power Systems Development.

The €8 million grant approval follows a $980,000 grant approved end-2018 by the New Partnership for Africa Development's Infrastructure Project Preparation Facility (NEPAD-IPPF), which is a multi-donor Special Fund hosted by the Bank, to co-finance this technical assistance.

Ruzizi Hydropower Plant Project IV meets the goal shared by Burundi, DRC and Rwanda to optimise exploitation of their energy resources by integrating electricity generation, transmission and distribution infrastructure. The project falls within the overall regional energy market framework being developed by the Nile Equatorial Lakes Subsidiary Action Programme (NELSAP) and the Eastern Africa Power Pool (EAPP).

Ruzizi IV also aligns with the Bank's High 5 priority to "Light up and power Africa", as well as the Bank's strategy on regional integration, and specifically, development of regional energy infrastructure. 

Cabinet Appoints Victoria University's Biribonwa As NIRA Board Chairperson

A cabinet meeting that sat Monday, January 13, 2020, at State House Entebbe approved the appointment of the Chairperson and Members of the Governing Board of the National Identification and Registration Authority(NIRA).

The NIRA board will be led under the chairmanship of Joseph Biribonwa. He will be assisted by Ms. Ruth Nvumetta L.M.Kavuma as Vice Chairperson, Dr. Betty Kivumbi Nannyonga as a Member, Maj. Gen. Apollo Kasita-Gowa as a Representative of the Directorate of Citizenship and Immigration Control and Mr. James Saaka as a Representative of  NITA (U).

Others are Mr. Bemanya Twebaze as a Representative of the Uganda Registration Services Bureau, Dr. Paul Kintu as a  Representative of the Ministry of Internal Affairs and Dr. Chris Ndatira Mukiza as a Representative of  Uganda Bureau of Statistics.

Biribonwa is also the Vice Chairperson of the University Council at Victoria University and his appointment delighted the leadership of the private university owned by the Ruparelia Group.

“We at Victoria University congratulate our Vice Chairperson of the University Council, Mr. Joseph N. Biribonwa upon his new assignment as the new Chairperson of the Governing Board of the National Identification and Registration Authority (NIRA). 

We know Mr. Biribonwa as a seasoned expert in democracy & governance, management & administration, finance, and corporate governance, with over forty (40) years of professional experience.

He also served as Deputy Chairperson of the Uganda Electoral Commission and Chairperson National Initiative for Civic Education in Uganda (NICE-Uganda).  The Cabinet of Uganda could not have made a better choice in appointing Mr. Biribonwa the Chairperson of NIRA Governing Board,” the Vice Chancellor of Victoria University Dr. Krishna N. Sharma said in a brief statement. 

 

 

Full Scholarships Now Available At Victoria University

Victoria University, one of the many education investments made by the Ruparelia Group, has announced that aspiring students can now get fully funded scholarships to study courses of their choice at the Jinja Road based institution.

Victoria University Vice Chancellor Dr. Krishna N. Sharma said students applying will, however, be mandated to pay a small application fee.

The university didn’t specify how many scholarships they are going to give out but last year, Victoria University gave out a significant number of scholarships through the Ruparelia Foundation and the beneficiaries commenced their studies.

 In December, to celebrate the festive season, Victoria University offered students joining the institution for short courses this festive season up to 20% discount on fees. The offer closed on 31st December 2019. And now, for the March-April intake, they return with big offers.

In a recent interview with News Today Uganda, the Vice Chancellor Dr. Sharma said the university is going in the right direction and is destined for greatness and wants parents and students to consider it because it is a university that ‘helps you identify where your strength lies as an individual.’

"Before going to a university, a student and parent should know what the child wants to do for the rest of his or her life. I suggest that parents should help their children identify their passion.

"At Victoria University, we help you identify where your strength lies as an individual. You don’t have to sit in a class with hundreds of other students, you can’t get that Victoria University.

"Victoria University has state of the art facilities. Our professors are well vetted before being recruited. Every lecturer is interviewed not just by anyone but the VC, faculty deans, university council and the appointments committee. We are so careful when finding a fulltime staff.

What's This All About?

By Michael Businge

Most times in my language, we call this as Kwetera endobo-shooting ourselves in the foot!
 
On Wednesday, Greta Thunberg, the 16-year-old Swedish Climate Change Activist during the COP 25 in Madrid (climate change summit) challenged leaders at all levels about our commitments. Of course, we have not done much on climate change.
 
She rebuked us about having done nothing. I don't think that we haven't done anything. She was bitter, very emotional and challenged world leaders on having destroyed the environment and having cared less. Is it true that we have done nothing? The answer is yes and no. 
 
Since we ratified climate commitment for a meeting that was held in Paris, we were meant to domesticate and come up with workable commitments. There is a climate change bill( not sure if this has been passed by our Parliament.
 
Of course, we have done some work such as creating awareness, but I feel that we can do more!
 
The journalists have written articles in the national media but there has been little debate on radio stations yet they're the most listened to media. Solar energy and clean cooking have been promoted but I feel we should do more. We must actually stop taxing clean energy technologies.
 
The car manufacturing industries are undergoing reforms to produce "clean" vehicles. Uganda is set to ban importation of second-hand cars. I want to live and see this actually happen. Campaigns have been on leaving the oil in the soil; but is this possible?
 
With infrastructural development which of course is meant to propel us (Uganda) to achieve Vision 2040 has to been done in a sustainable way. Unfortunately, we have destroyed carbon sinks such as forests, built-in wetlands. This will affect mostly the poor who can not afford medical care. 
 
Just recently, in New Delhi- India, pollution levels rose up and this affected major sectors of the country such as transport, people could not breathe well and the health centres were overburdened. New Delhi is far. Our own Kampala has declared a polluted city. Increased cases of pollution have been reported, air pollution is real.
 
Recently, I  got a Safe Boda from Mutungo to Namirembe, but after navigating through, I felt my eyes irritating, could not breathe well. I really wished to breathe Hoima air. But I realized that the atmosphere has no boundary much as there are concentration levels of particulate matter, CO2, and other clorofrocarborns in particular places. 
 
On a world scale, I feel that Africa has played her role. However, the west has acted as bullies and not willing to carry out reforms. Of course, on the negotiation table, we have come with little to offer and our arguments have been irrelevant for the West.
 
For carbon markets- why would they be paying us for the conservation of carbon sinks if they are unwilling to reduce carbon emission quotas? They do not want to invest in expensive clean technology, which is cheap in the long run!
 
The US has threatened to leave the  Paris Climate pact. This complicates the climate change campaign efforts. However, all is not lost because another major polluter (China) said it will reduce her carbon emissions.
 
Whether this is real or rhetoric, I do not know. But why would they (West) own oil companies extracting oil in Africa yet they preach to us about climate change? Why? 
 
We can intensively campaign for subsidies on clean energy technology, create an environment better for our innovative young people.  Most importantly, we need to walk the talk or else the talk will walk us out forcefully.  Maybe we need to learn the hard way! 
 
The writer works as a Programs Officer at Youth4Nature Uganda

Victoria University Offers 20% Fees Discount On Short Courses

Victoria University has offered students joining the institution for short courses this festive season up to 20% discount on fees.

The Ruparelia Group-owned university said this is aimed at giving back to Ugandans, but also to ensure that people enjoy the festive season happily.

The University Vice-Chancellor, Dr. Krishna N. Sharma, said the offer ends on 31st December 2019. He added that over 100 students have already applied.

“With a short course of your choice, you can access the offer. Registration is already taking place for students to grab the opportunity of the festive offer,” told Business Focus in an interview.

The University offers many short courses including but not limited to Digital Marketing and Social Media, Foundation Mathematics, English language for university students and Effective Writing and Communication.

Others are Understanding the World Today, Entrepreneurial Development Studies, SPSS-Statistical Package for Social Sciences, Introduction to the Oil and Gas Industry, Export Trade Promotion, Certificate in Sustainable Microfinance and Basic Computer Applications.

The university under the Ruparelia Foundation offers scholarships to Ugandan disadvantaged students. The scholarship launched last year saw over 120 benefit.

Rajiv Ruparelia, the promoter of Victoria University, noted that his team is committed to playing a leading role in bringing and developing high–quality, student–centred learning opportunities based on standards of excellence that are unique, innovative and difficult to match. 

 

Centurion Law Group’s Adeoye On Importance Of Legal Profession To African Development

Centurion Law Group’s Senior Associate Zion Adeoye is an oil and gas specialist who has focused his career on energy law and finance. He is the Country Relations Lead for South Sudan at Centurion Law Group. He has been a key legal advisor on over 25 oil and gas investments in 12 countries across Sub-Saharan Africa.

Zion holds an LLB from the University of Ibadan, Nigeria and a BL from the Nigerian Law School. He is a member of the Nigerian Bar Association and the Association of Independent Petroleum Negotiators (AIPN). He is currently undertaking an MBA in International Oil and Gas Management at the University of Dundee, Scotland.

In this interview, he talks about the need for the legal profession for Africa to develop economically.

Do you think the current African oil market is adjusting or keeping up with the modern world – enough to play in the same field as America as UAE? 

Markets, including the oil market, are significantly driven by demand and holding a sizeable supply profile. The modern world is in a state of flux in terms of energy demand and supply, whether we are speaking of hydrocarbons or other energy sources.  Africa has the ability, more than ever, to shape the energy world order rather than merely keeping up.

With the US increasing its production profile, the inevitability of scientific breakthroughs in Shale within the next decade for other regions of the world which are currently major hydrocarbons markets for Africa, and potentially significant shift from fossil fuels in Europe,  there is a risk that many out-bound African projects might be in limbo. unlocking the African market is not just a nice-to-have, it is a necessity.

What would your advice for African markets be?

Africa must bring the strength of its population to bear on the global market. Through centralized and regional efforts, Africa must diversify its economies and empower its people, creating alongside a demand base to be reckoned with globally. While achieving this, Africa must begin to look inwards, create and power industries through its own energy.

The population of Nigeria alone is more than a quarter of entire Europe. There is, therefore, a potentially viable market within Africa, which we must begin to unlock as a priority and Intra-African trade must become a top burner to sustain this. The African Continental Free Trade Agreement is a statement in the right direction, but we must begin to see concrete steps that match this statement.

Considering the strides and discoveries that took place in 2019, where do you see the African Energy (oil & gas) market going in the next year: Trends for 2020/2021 and why.

Short of fulfilling the Buridan's ass paradox, Africa is more than justified to aggressively pursue its oil and gas exploration aspirations. What we have seen in 2019 is just the beginning as I believe many new players will join the wagon within the next 3 years. We have also witnessed the ascendancy of African independents oil and gas companies in African E&P across Sub-Saharan Africa and this is a trend that must continue in other to retain value within Africa.

There’s been a lot of talk about carbon emissions, do you see African completely turning away from exploration and production of oil and moving towards green energy any time soon? Or do you think Africa’s oil industry needs to adjust uniquely on how it defines itself to be more eco-friendly.

Contrary to general assumptions, even though accidents continue to occur, the oil and gas industry has significantly improved its health, safety, and environment (HSE) profile over the last decade, but admittedly, the improvement falls far short of what scientists have established will be needed to reduce carbon emissions in order to successfully combat climate change.

Drilling down to Africa’s contribution to carbon emissions vis-à-vis its dependency on hydrocarbons revenue, it’s a no-brainer that Africa is the least culpable even while countries like Gabon continue to show leadership on environmental preservation.

While Africa must have a coordinated plan in the medium to long term on energy base transition and also to achieve zero-flare status in its oil and gas industry, China and the US continue to significantly dominate the global emissions profile and more meaningful cuts will have to come from these countries. China and the US contribute about 40% of global fossil CO2 emissions.

Africa certainly needs a further ramp-up period to grow its industries to achieve a level of economic security at which point a whole-scale energy-source shift will be feasible.          

What are your views and predicted operating implications or wins, regarding the recently announced Nigerian Deep offshore and Inland Basin Production Sharing Contract (Amendment) Act 2019?

The new Act codifies the Nigerian government’s position on lingering issues relating to Nigerian deep offshore and inland basin PSCs, especially the fiscal terms. While investors will make a judgment on whether the terms are fair or favorable for investment, clarity, and certainty through legislative enactment is always a welcome development for investors.

You were one of the legal advisors that drafted, negotiated and advised on the Exploration and Production Sharing Agreement (EPSA) for the B2 Block signed this week between South Sudan and South Africa. What made this deal the deal of the century for the two countries?

To retain significant oil and gas industry value within Africa, a good number of oil and gas deals must have African players at both ends of the table. Having two African countries successfully complete a deal such as the Block B2 acquisition goes one step ahead in my opinion as the local content imperatives of both countries will be afforded full expression. Also, for South Africa and South Sudan, the upstream and downstream synergy potentials on the deal is huge and perhaps a worthy model for cementing of relations between African nations.

You’ve worked on some of Africa’s most significant Energy deals and top matters. Where have you seen a sustained impact and what can other countries/ministries learn?

I am passionate about the African oil and gas industry working for Africans, not only in terms of revenue generation but also in terms of other KPIs such as energy availability for African industries, engagement of the local private sector across the oil and gas value chain and the development of technical capabilities. I have seen significant efforts across the board with the increasing involvement of African players on these KPIs but a lot more is needed.

In terms of scaling up technical capabilities where significantly more impact is required, I believe more opportunities must be afforded to the local private sector players in Africa, because, let’s face it, skills and capabilities are neither gender nor race exclusive. There is an all-but-scientifically-proven standard amount of formal education, practical experience and financial resources required to ramp up to the desired level of capability on any given project. Perhaps regulators will have to be more scientific in aggregating these three elements and making them available to local players.

What do you wish you had known about the legal profession before becoming an attorney?

Simply put, the importance of the legal profession to African economic development. I would argue that many African countries would have been better served by being afforded sound legal advisers at the deal table than peace-keeping soldiers and foreign aid.

Africa Should Be Allowed To Use Its Resources

On the backdrop of the climate change debate, Africa finds itself in an unfortunate position where it is required by the global energy industry to slow down its progress and not explore its hydrocarbons potential to its fullest. This is not right.

At the African Energy Chamber, we do not deny the impacts and severity of climate change. We recognize the role and significance of the Paris Agreement which over 30 African countries have signed. However, we believe the energy transition should be gradual and considerate of the power gap the exists in Africa.

On the continent, our foremost obligation as industry leaders is to ensure that Africa’s people have access to energy. We are determined to address the everyday issues that the continent is faced with.

Energy poverty is Africa’s most critical concern. For us, it is a life and death situation. In Africa, over 600 million people still do not have access to power. And, we remain a net importer of energy yet we boast 125 billion barrels of proven oil reserves, accounting for 7.3 percent of global oil reserves and, 509 tcf of gas – accounting for 7.2 percent of global reserves.

Our natural resources are important for our development. We cannot ignore what the continent needs, in the interest of supporting global trends when our economies remain underdeveloped. Our hydrocarbon potential is vast and Africa is home to a number of emerging economies who are steadfast on taking their rightful place in the global energy sector, our time to industrialize is now.

We applaud our brothers, sisters and friends in the west such as Norway and Germany for having used their oil and gas resources to develop their countries and build thriving economies. But, Africa deserves the same opportunity to build world-class economies.

“At the African Energy Chamber, we understand that issues of climate change are important but, this new drive for environmental colonization bullies African countries to leave their resources and depend on the sun,” said NJ Ayuk Executive Chairman of the African Energy Chamber and author of Amazon best-seller, Billions at Play: The Future of African Energy and Doing Deals.

In the past, Africa has been far too reliant on foreign aid and while in some ways it has been extremely helpful and beneficial, it has also taken away our independence. In several instances, Africa has always taken the passenger seat when it comes to deciding its future but, it must end now.

Our continent needs to be left alone to decide its own fate.

The African Energy Chamber strongly stands against the idea that Africa should ignore its potential and ability to leverage its resources as a means to drive growth, create opportunities for investment and development.

As the voice of the African energy industry, we are proud to announce our counter-campaign on the insistence that the continent should pursue a less carbon-intensive energy future as a way to support global interests which Africa has not yet benefitted from.

Most Heart Diseases Are Simply Caused By Our Lifestyle Choices – Cardiologist

Dr. Okello Emmy, the lead cardiologist from Uganda Heart Institute, has advised Ugandans to embrace healthier lifestyle in order to prevent heart related illnesses.

The cardiologist, speaking at the second edition of the Prudential Heart Camp revealed that heart diseases are preventable and most of them are simply caused by our lifestyle choices.

“I urge all Ugandans to adopt a much healthier lifestyle by exercising, eating right, keeping away from stressful activities, having regular medical check-ups to check your blood sugar levels, BMI, Blood Pressure, that’s the only way we can prevent heart disease,” said Dr. Okello.

Dr. Okello said Uganda Heart Institute received patients who have been diagnosed with heart diseases while others are referrals.

He said people with fresh cases are advised how to adjust their lifestyle in order to live a normal life and how to curb the continued progression of the disease while referred patients are helped to adjust their medication.

“We were glad to receive many people whose hearts were healthy and this is exactly what we encourage, you should not wait to feel pain or other signs and symptoms of heart disease before you see a doctor,” the doctor said at the health organized by Prudential, an insurance company.

The Prudential heart camp was hosted in partnership with Ministry of Health, Uganda Heart Institute, International Medical Centre, NBS TV, Radio One and Akaboozi, Capital FM.

Over 3000 Ugandans had access to free heart check-ups which consisted of ECHO, ECG and advice from professional Cardiologists, Doctors and Nutritionists on how to prevent heart disease.

Other check-ups included BMI, blood sugar and blood pressure all at no cost. In addition, the campaign hopes to reach 10 million Ugandans country wide through TV, Radio and Social Media to spread the message of better heart health through regular check-ups, exercise and better nutrition.

“Our decision to host a Heart camp was prompted by the rise of Non-Communicable Diseases in Uganda. The last national survey published by the Word Health Organization and Ministry of Health indicates that in Uganda alone, 1 out of 4 adults has high blood pressure which is a major cause of heart disease and other heart related complications’’ said Arjun Mallik, MD Prudential East Africa at the press conference during the closing of the camp.

Some interesting statistics from the Prudential Heart Camp include:-

  • 57% were male, 43% were female
  • 64% had abnormal blood pressure, majority of whom were between the ages of 32 to 50
  • 61% were overweight
  • Only 1.5% had high amounts of sugar in their blood

Some of the abnormalities noted include hypertension, enlarged hearts (dilated cardiomyopathy) and diseases of the valve.

How Co-Operatives Aid Development In African Economies

By Edward Israel-Ayide

The rapid advancement of mechanization from the mid-1700s to the early 1800s which is now considered as the Industrial Revolution, resulted in job losses for many skilled workers across Europe. The knock-on effect of this development was a significant rise in poverty.

With a reduction of earnings and often disappearance of spending power, it became difficult for the broader population to contend with middle-men and traders who sought to profit from the situation by institutionalizing unreasonable prices and labor practices.

In 1844 a group of 28 weavers and skilled workers got together in Rochdale, England with the aim of establishing a society to counter the injustice of price fixing and low wage setting, and by launching their own shop they made it possible for the local community to buy staple goods which had become out of reach.

They derived valuable lessons from previous botched attempts to form co-operatives and ostensibly designed the now-famous Rochdale Principles which have become the standard for Co-operative societies globally and which were officially adopted by the International Co-operative Alliance (ICA) in 1937 as the model for Co-operative societies.

This pioneering group, inspired by a genuine concern for the economic wellbeing of their members and community, are now known as the Rochdale Pioneers and are the founders of the modern Co-operative Society which today, reportedly comprises of around 2.6 Million co-operatives with over 1 Billion members and clients.

Since the time of the Rochdale Pioneers, Co-operative societies have progressively become a meaningful part of economic development; not only for society members but also for the wider communities within which they operate.

Across Africa, Co-operative societies have performed a critical role in the fight against poverty by providing opportunities to create wealth through trade and the development of agriculture. According to a World Bank report, co-operatives possess the potential to provide affordable credit to small-scale farmers because they can reduce transaction costs and lower the risk of default.

This is possible because successful co-operative societies provide incentives for members, encouraging a loyalty which also delivers the added benefit of maintaining a competitive position. In providing services to their members, cooperatives generate income through a variety of commercial ventures.

Sustainable, or in other words successful Co-operative societies are those which can balance the concerns of the society with the benefit of aiding the economic growth of the area which it serves.

The perfect illustration of this is the Total E&P Nigeria Staff Multipurpose Co-operative Society Limited (Total E&P Co-op); a Co-operative Society comprising the staff of Total E&P Nigeria Ltd, (a local subsidiary of Total S.A. the French multinational integrated oil and gas company).

Founded in 1984, in the humble surroundings of the mailroom at the Nigerian Oil Company, the staff at Total E&P seized the opportunity that economic downturn presented, to establish a communal economic system, where active members could unite to make bulk purchases of essential commodities at reasonable prices, for distribution amongst its members.

The Total E&P Co-op was born and soon blossomed to incorporate a more sizeable number of staff coming together to establish the forebear of Total E&P Co-op; Total E & P (Nigeria) Thrift and Credit Society Limited which was a savings and loans society.

By 1994, the Co-operative Society had shifted focus to matters of basic human requirement and pooled member funds together towards the purchase of real estate through the collaboration with commercial banks. Today, Total E&P Cooperative’s asset base has grown over a thousand fold from inception.

Thanks to an increasing and constantly motivated workforce contributing their quota to its core areas of interaction between members, together they boast assets in Real Estate, Treasury & Financial Services, and Business Development.

The success and growth of the Co-operative Society has been due to several contributing factors but three factors stand out in providing valuable lessons for other co-operatives (or even governments) across Africa who intend to adopt the Co-operative model to reduce poverty, increase financial inclusion and create wealth.

Combating Poverty and Creating Wealth Through Corporate Social Responsibility

The founders of the global co-operative movement-the Rochdale Pioneers-were striking weavers who opened a grocery co-op to extricate themselves and others from poverty. Their aim was to provide answers to questions about whether the economy should serve the people or vice versa; this belief in economic fairness led to the development of co-operatives as we identify them today.

Since then, co-operatives have carried out a fundamental role in combating poverty and creating wealth, especially at the grassroots level. As stated by Joseph Ventura, an expert on the impact of co-operatives; “In transforming poverty-ridden communities into vibrant economies, co-operatives also contribute to skill-development and education as they bolster gender equality and improve the health and living standards of an entire community. Co-operatives have been instrumental in meeting the Millenium Development Goals, as nations are more likely to stay peaceful by escaping the poverty trap."

For the Total E&P Co-op, these efforts have been at the core of plans for sustainability and the growth of the collective’s commonwealth. It has led to the creation of products and services tailored to the needs of members/cooperators in the real estate, insurance and financial services sectors.

Equally investment in Corporate Social Responsibility (especially through STEM education and in providing quality education to the disadvantaged members of society), help equip young Nigerians with the skills necessary to become more productive members of society.

In a country like Nigeria where over 50% of the population faces extreme poverty, these empowering initiatives help bridge the poverty gap where governments have failed and provide opportunities for the young through job creation.

In his paper “The Role Of Cooperatives In Poverty Alleviation” Christopher Imoisili, Senior Specialist Entrepreneurship & Management Development of the International Labour Organization (ILO) drew attention to how cooperatives help both members and employees to escape from poverty, by offering an umbrella of shelter to those who may be facing the risk of poverty.

He added that “By promoting student and youth programmes and cooperative entrepreneurship...cooperatives can play a major role in bridging the [poverty] gap. They can also influence political processes and legislation in favour of the socially deprived.”

Corporate Governance

While co-operatives are typically run democratically, relying heavily on member engagement; it is important that they balance this with the strategic management of their business in a way that ensures the continued survival of the Co-operative and its viability as a business concern. It has been reported that most co-operatives in Africa and other emerging economies collapse because of weaknesses in their corporate governance or the total absence thereof.

According to a 2014 paper written by Marilyn Scholl, a consultant with CDS Consulting Co-op and Art Sherwood, an Indiana State University Associate Professor of Management; there are four critical pillars upon which corporate governance should be built in any Co-operative organization and strict adherence to this has sustained Total E&P Co-op as a viable business concern.

These four pillars; Teaming, Accountable Empowerment, Strategic Leadership, and Democracy have been at the heart of the various changes that Total E&P Nigeria Staff Multipurpose Co-operative Society has made in its team structure over the years.

For example, it has applied these principles when filling critical leadership roles within the organization with those who not only have the qualifications, but are also experienced in their field of practice and can therefore be held accountable for strategic decisions taken on behalf of the Co-operative.

The co-operative also remains the first and only Co-operative Society in Nigeria to appoint an External Auditor (PricewaterhouseCoopers) to review financial records and determine its compliance with internal and regulatory policies guiding the affairs of the organization.

This system of checks and balances, peer-review and external regulation is a major turning point for public and private institutions looking to remain viable in the face of global economic trends such as price fluctuations in global oil and other commodities.

Strategic Planning 

For institutions looking to achieve viability and sustainable growth, planning for the future is a  critical requirement.  For many societies across Africa, failure to plan for the future and align with trends has been at the heart of the majority of socioeconomic failures. This undoubtedly has had an impact on broader African economies.

As Total E&P Co-op grew its membership and revenue, they created an organizational structure which would allow it to develop a sustainable strategic plan and guide operations for the years to come. Beginning in 1997, the linear business model of the Co-operative had outlived its usefulness and the growing membership base of the co-operative society now had increasingly diverse needs.

To meet these needs, Total E&P Co-op changed their model to one of a multipurpose Co-operative business and made massive investments in human capital, placing a priority to the recruitment of a full-time technical team which ensures they maximise the investments of their strategic business units and profit centers.

The strategic business units identified were those that would enable the business to create long-term profitability and position it as the Co-operative of the future. In line with this, the Banking and Investment desk of the Co-operative was set up as the ‘Treasury and Investment Hub’ whilst it migrate the financial services into a Co-operative Bank to support future ventures.

The real estate development, management, and marketing operations were restructured so that the Co-operative could partner with established property developers and build, operate and transfer investments in the real estate business. This futuristic strategic planning has enabled Total E&P Co-op to become the fastest growing Co-operative Society in Nigeria as reflected by its growth in relation to Nigeria’s GDP.

Total Living, is the culmination of plans to improve the success and sustainability of its cooperative model. They have embarked on the first real estate development project to be certified under EDGE sustainability in West Africa (a Green building standard and rating system for over 150 countries introduced by the IFC/World Bank).

La Definition, as the project is called, is a smart, innovative mixed-use development that sits on 22,000sqm of land located between the Kuramo Lagoon and Lagos beachfront. The project is set to steeply increase revenue for members of the cooperative whilst improving the amenities available to the diverse population of Victoria Island, Lagos’ center of business and commerce.

La Definition will feature some unique solutions to tackle the limited availability of grid infrastructure in Lagos including a water recycling system that will reduce demand for borehole water by up to 80% through the use of rainwater and greywater. An energy center is also planned based on the gasification of sustainable waste streams to produce very clean synthesis gas that will generate electricity and heat for the development with zero CO2 emissions.

For emerging African economies keen on implementing policies and projects geared at economic growth, job creation etc., there are important learning points to be gleaned from cooperatives The successes of Total Co-op provides an insight into how the larger Nigerian society, and indeed Africa, can progress where there is commitment to strategic planning, governance and investment in human capital.

The co-operative model may just hold the key to reversing the poverty rate on the continent with the benefit of strengthening communities and fostering sustainable development.

Edward Israel-Ayide (@wildeyeq) lives in Lagos, Nigeria and comments on socio-political events across Africa.

How To Avoid Sanctions For Breach Of Local Content

By Pablo Mitog

You want to avoid sanctions for lack of compliance with local content norms in Equatorial Guinea? Easy, start complying. We intend here to provide you the key steps to ensure your local content compliance in Equatorial Guinea. For a full diagnosis of your compliance, please make sure to contact our attorneys on the ground.

The common problems that companies have with local content in Equatorial Guinea

In 2018, the Ministry of Mines and Hydrocarbons of Equatorial Guinea informed operators Exxon Mobil, Noble Energy and Marathon Oil that they should stop doing business with several companies because they were not in compliance with local content regulations under the country’s hydrocarbons law and the clauses of their PSCs. The truth is that it was not the first time that happened. In 2015 and 2016, there were also economic sanctions for the breach of local content requirements. With the local content Ministerial order covering only 20 pages, it seems surprising that companies could be risking their operations and contracts over something very straightforward. To understand the catch, read on.

Between 2015 and 2016 in our offices in Malabo, we had the opportunity to assist the Government in a plan that was unprecedented to audit oil and gas companies and verify their compliance with their local content obligations.

We were very surprised to see how the legal departments of large oil companies did not know exactly how to protect their organizations against these demands. Because the number of companies that did not comply was very high, the Ministry decided to adopt a more collaborative than penalty approach, without which all operators and contractors would have been sanctioned in some shape of form.

Reserving the confidential client information, we observed that most of the in-house local content departments of these companies have three common problems: 1. determining who is obligated to do what under local content regulation; 2. knowing what local content includes; and 3. correctly developing a local content plan that meets very specific points required by applicable laws.

To examine these common problems, it is necessary to briefly clarify what the local content is according to the legislation of Equatorial Guinea. The keyword of the local content is “privilegio.” This is a set of privileges that companies or physical entities have and whose purpose is to obtain preferential treatment with respect to other companies and people from other places when obtaining contracts in oil & gas and mining. These privileges belong to local companies, companies of the CEMAC community, or African companies.

The local content regulations in Equatorial Guinea are broader than just those set out the ministerial order. They can be found in five main legal documents: the famous decree 127/2004 (amended in April 18 of 2018 by the decree 72/2018) that ensures local participation in the oil industry, the Law No. 8/2006 of November 3rd regulating Hydrocarbons in its articles 88 to 93, the Ministerial order 4/2013 regulating petroleum operations in articles 156 and 157, the Ministerial order 1/2014 on local content.

Lastly, all PSCs have very specific local content clauses. The Labor Code also contains laws such as Law No. 6/1992 on national employment policy that also affects companies in the sector, and the list goes on. The question is, how do we put together all the requirements of those laws to get a unique list that tells a company what exactly it should do to comply with local content? While complex, the exercise is feasible and quite straightforward when you know where to start and what to consider.

Because the circumstances and needs of each company are different, local content laws are also flexible. Flexibility in the terms of the law does not mean an exemption from compliance, but compliance mechanisms that can be negotiated with the authorities. For example, you can get more time to meet a specific obligation.

Now that we have outlined the basic frame of local content, we can explore the common problems that companies in the oil and gas sector have when they deal with a local content audit in Equatorial Guinea.

Operators or contractors: who is obligated under local content regulations?

The oil and gas industry is governed by agreements, and many companies have to form alliances and joint-ventures to operate together. This may create doubts about who is obliged to comply with local content laws. According to article 2 of Ministerial order 1/2014 on local content all companies that carry out activities in the petroleum and mining sectors are obliged to comply with local content requirements. This includes: operators, explorers, contractors, sub-contractors and their associates even if they are local businesses.

According to this, a) you have to have a contract in the sector and b) you have to operate in Equatorial Guinea. However, despite this clarity, there are many doubts that may arise, for example: what happens to companies that have contracts in the sector but are only licensed to provide material from abroad? Equally, if two companies are linked by a joint-operation agreement, must they comply individually or jointly? Another question that may arise is on whether a local company has to comply with all obligations or if it must simply comply with some.

For example, it makes no sense that a local company would be forced to transfer technology just because it is from the oil sector. For such questions that require an interpretation, companies must work with the local content authority to obtain their interpretation in writing. It should never be assumed that a certain obligation is not applicable to a company. This is part of what we consider being flexibility in the local content laws.

The main obligations that any company should pay attention to

Local content is much more than building a primary school in a village or drilling a small water well in a local community. In our experience, it is very common for companies to present small works carried out in the villages as being works of compliance with local content. While the value of such efforts should not be minimalized and corporate social responsibility should be encouraged, a company could still be sanctioned for lack of local content compliance despite having spent money and time on CSR.

Local content mainly includes five obligations that must be structured in detail in a local content plan. These obligations include:

  1. Procurement of goods and services. All necessary goods and services must be hired in order of preference established by the local content regulations. To prove it, companies must keep their invoices or any other document proving that they hired local services. However, it should be clarified that there are limitations to guarantee that the local procurement obligation does not cause prejudice to a) quality (local goods and services must meet international quality standards) and b) price (local goods and services cannot cost more than 10% of what the same good or service would have cost if it had been brought from abroad). That is why we insist that companies should take advantage of this flexibility to adapt each obligation to their particular needs.
  2. Qualified workforce. All workforce must be hired in the order of preference (local, regional and continental). Foreign workforce can be hired only with an authorization, after demonstrating that the company has made substantial efforts to find specialized local workforce and has not found it. However, the authorization to import foreign labor only gives you an extension of time, because the obligation to train local labor prevents you from keeping your foreign workforce over a long period of time. If you have proven your inability to find local manpower for a specific position, you are still obligated to train local talent to fit that role so that you are able to gradually replace your foreign labor.
  3. Technology transfer. This is another common problem for companies. We know that nobody is going to transfer the tools they can earn a profit from, and which gives them an edge on the market. Technology is the greatest power a company can have and today IOCs dominate the market because of their technology, and their edge over NOCs is not only financial but above all technical and technological. Forcing foreign companies, be them IOCs or oilfield services, to transfer their know-how is very complicated to achieve. However, the spirit of the law is not that business or industrial secrets are transferred to local premises. So how do you know that a company transfers technology within the framework of local content legislation? That question is also not easy to answer. However, the practice followed by the authorities is to verify if the company has a plan to ensure that its local resources are technically capable of carrying out their work with the international quality standards generally accepted in the industry.
  4. Training. The clearest and most difficult clause to ignore is that pertaining to the training of local employees in order to enhance their skills. Although this obligation is already included within labor laws, the object and spirit of both laws (labor and local content) must not be confused. What is the difference? If in the labor laws it is envisage that an apprentice gains experience or acquires the skills of a profession or trade, the purpose of the local content is to specialize these in very specific tasks within the petroleum industry so that they are able to carry them out in the future autonomously with the same technical competence as a foreign expert. So, complying with one doesn’t mean that you don’t have to comply with the other. Basically, the local content laws requirements of training start where the labor laws reequipments ends. With the right advise and the correct approach, both laws can be easily complied because there is not necessarily a conflict between them.      
  5. Social Infrastructures development. What does the local content regulations refer to when they impose the obligation to run infrastructure in the communities, and is any particular infrastructure expected to be developed by oil companies and their contractors? Article 93 of the hydrocarbons law says verbatim that “they must (the infrastructures) be of the widest impact on the public.” In other words, infrastructure must be meaningful and of the quality that a community would need.  It’s very important to make sure that the Infraestrure is also sustainable to the community; You don’t want to build a school without a plan to provide teachers nor learning materials or build a health center in a poor community without any nurse. The community need a school or a health center operational, not an empty building. Practical requirements in this regard have to do with a) sustainability over time b) the importance and quality of the infrastructure to substantially improve the life of as many people as possible in a local community.

What should be in your local content plan?

The local content regulations oblige all oil and gas companies to have a detailed, long-term local content plan and implement it. Companies must also demonstrate that they are reasonably executing the plan they themselves have prepared.

The important thing about this plan is that: a) it is flexible, b) it is a plan that can be adapted to the individual circumstances of each company and c) must be approved by the General Directorate of Local Content. The design of the local content plan, its evaluation and presentation to the authorities when undergoing an audit is the most critical part. Almost all companies that have been sanctioned have breached some of the essential points of their own plan.

We can organize these into four large groups: i) Documentation related to the incorporation of the company; ii) Documentation related to the procurement of goods and services; iii) Documentation related to technology transfer and training of personnel; and iv) Documentation related to infrastructure development. Although we do not intend to address all these aspects in details, the following according to our experience are the ones that can create the most problems for a company.

  1. Documentation related to the incorporation of the company:
  • Notary deed duly legalized and registered in the Commercial Registry,
  • Certificate of Tax Identification Number (NIF),
  • Registration of company in the MMIE.
  1. Documentation related to the acquisition of goods and services.
  • List of all partners and suppliers of the company, as well as the contracts, offshore and onshore signed with them,
  • National Content Development Program and its evaluation plan,
  • Detailed report on contracts awarded to local companies,
  • Proof of semi-annual shipments of the updated list of services that the company needs to contract,
  • Proof of payment of social shares to local partners.
  1. Documentation related to technology transfer and staff training:
  • Detailed reports on job vacancies and jobs to be created,
  • Training plan for local employees,
  • List of local staff and their evaluation and promotion system,
  • Annual internship program for students of the National University of Equatorial Guinea.
  1. Documentation related to infrastructure construction (with social impact)
  • Detailed report on Social Work Projects and their degree of compliance.

How serious is the local content compliance issue?

The highest penalty for breaching local content standards is that the government can order operators to terminate contracts or prohibit them from renewing contracts they have with a company that does not comply; and this has already happened in the past. Other sanctions include financial sanctions that in the past have reached anywhere between $500,000 to $3 million, sometimes more if we analyze the full impact of the consequences of a sanction. Other much lighter sanctions have included a warning with the company being given a short amount of time to meet very specific requirements.

Furthermore, if a company demonstrate a track record of non-compliance, they will lose the confidence not only of the government but of the operators, because every time a company is sanctioned, all its partners are affected in some way.

Conclusion. So far, three things must now be clear: a) failure to comply with local content requirements may jeopardize not just a company's contracts, but its very existence in Equatorial Guinea and its ability to renew or obtain new contracts b) local content is a complex issue but c) managing its compliance is not a big deal providing the right steps are taken early on.

At Centurion Law Group, thanks to the experience that we have accumulated over the years and in several African jurisdictions, we are always willing to assist and advise companies to deal with these problems in the best way so that they can protect their interests and that their operations are carried out without any risk.

Pablo Mitog,Associate Attorney, Centurion Law Group

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