Baz Waiswa

Baz Waiswa

Delay To Produce Oil Should Be Looked At As A Blessing

Uganda, despite discovering oil and gas in 2006, has failed to produce it but this delay, according to some key members of the private sector, is a blessing. While the delay to reach first oil has caused anxiety in some circles, Dr. Elly Karuhanga, the Chairperson Uganda Chamber of Mines and Petroleum (UCMP) has his reasons to count it as a blessing.

“The oil and gas industry can be so much likened to taking a flight. Before a plane takes off from the ground, so much preparation goes on, cleaning, loading luggage, fueling, cockpit and cabin checks etc, once this plane starts taxing, if one is not on board, then it will be to late for them, he said.

Therefore, because of this delay, Dr. Karuhanga, asserts that Ugandans and Ugandan entities have a chance to organize, skill up, put systems in place, upgrade standards and create meaningful mergers to raise the required capital and technical ability to be able to meaningfully benefit from the sector.

But the former president of Tullow Oil Uganda is quick to say that the country can’t wait forever and is optimistic that the year 2019 will a year of action. “It will not be business as usual,” he told a press in Kampala where they announced the 5th Annual Oil & Gas Convention scheduled for Speke Resort & Conference Center in Munyonyo.

He emphasizing that this year is decision time, a reference to the expected Final Investment Decision (FID), a tool to be used by International Oil Companies (IOCs) to decide how much and where to put their money enroute to producing the country’s oil and gas. The countdown to commercialization of our oil is on, he said.

Over the years, Uganda has been setting targets to realize first oil but it has, we all know, failed get the hydrocarbons out of the earth’s core. Oil companies, Total E&P, CNOOC Uganda and Tullow Oil Uganda, operating in a Joint Venture partnership, had to wait for years to get production licences.

Now, with a couple of Front End Engineering Design (FEED) studies complete, the JV partners are working on reaching the all-important FID and for government to pronounce the preferred Engineering, Procurement and Construction (EPC) contractor to further pursue field development, infrastructure building and contracts awarding.

Mr. Peter Muliisa, the Head of Legal and Corporate Affairs at Uganda National Oil Company, and closely working with the teams pursuing FID, said key elements have been agreed on and the decision should be made by June this year. Same discussion are in advanced stages for the Host Government Agreement (HGA) between Uganda and Tanzani to speed up development of the East African Crude Oil Pipe Line (EACOP).

Once these back and further talks are wound and decisions made, then the private sector, those who will have prepared themselves, will literally ‘swim’ in oil money. The private sector and Civil Society Organizations (CSOs) have been lobbying government and the international oil companies to help Ugandans build capacity, skills, standard so that they can competitively by absorbed by the high demanding oil and gas industry.

Total and CNOOC have in past twelve month took on Ugandans to undertake welding training with the help to Q-Sourcing’s TASC project and Sunmaker Oil & Gas Training Institute. On its part, government set up Uganda Petroleum Institute – Kigumba (UPIK) and other programmes in the ministry of education and sports. Several private institutions are training and preparing Ugandans to work in the industry.

And with these talents graduating and business getting the right capacity, Petroleum Authority Uganda (PAU) set up the National Supplier Database and National Oil and Gas Talent Register. To appear on these two, it means that you qualify to do business in the industry even though it doesn’t necessary guarantee you business. It means you can compete with any other on these data bases.

UNOC’s Mr. Mulisa emphasizes that the time for Ugandans to participate in the oil and gas sector is now and should focus on other aspects of the sector. “Don’t focus on the oil, focus on the activities in which you can participate in to make money. This is our resource, we should participate. The laws are in place, find ways to joint venture,” he said.

Mr. Aggrey Ashaba of GCC Services says the delay to produce oil and gas has enabled Uganda to get the laws, policies and enter into partnerships and prepare well. GCC Services, a partnership of local and international investors, is involved in Engineering, Maintenance, Design and Construction of remote sites and camps for oil companies.  

Last year government operationalized the National Content Policy as a tool to facilitate how Ugandans participate in the oil and gas sector. This police is provided for in the National Oil and Gas Policy of 2008 and the subsequent petroleum Acts.

The oil and gas industry in Uganda is expected to absorb $20bn as investment in various projects a development Mr. Patrick Mweheirwe, the Managing Director of Stanbic Bank, describes as a life opportunity for Uganda to activate its economy.

“If only 30 percent of this investment can be part be spent on local entities, it would have dramatic multiplier effect on other sectors like manufacturing, agriculture, tourism, logistics and others. This will create numerous jobs and stability of dollar inflows,”

M2 Cobalt, Jervois Mining Coming Hard On Uganda

It is going to be a busy year for M2 Cobalt Corp in Uganda after the Canadian mining firm said it will approximately drill 6,000 metres at its various Ugandan properties. M2 Cobalt chief executive officer Mr. Simon Clarke said the company was pleased to be launching the next phase of its exploration campaign. The firm completed around 2,000 metres of diamond drilling before Christmas last year - mainly at priority targets at its Kilembe-area properties.

It said this year's program will include diamond and reverse circulation (RC) drilling and plans to launch additional ground geophysics (magnetics and Induced Polarization (IP) and rock grab and soil sampling within existing and recently acquired exploration licenses.

"We have a very large asset base with numerous large-scale targets and significant potential for new discoveries," said Mr. Simon Clarke, CEO of M2 Cobalt.  Adding that "The ability to leverage what we have learned to date into this expanded phase of drilling strengthens our position significantly. We are also extremely pleased to be able to add the technical and financial resources of Jervois as we move through the merger process and combine operations."

M2 Cobalt also revealed that its merger with Jervois Mining Ltd was progressing well after receiving support from shareholder. It said it expects a formal shareholder approval to be obtained via a vote in early to mid-May 2019. “We are also extremely pleased to be able to add the technical and financial resources of Jervois as we move through the merger process and combine operations.” said Mr. Clarke

As part of the process, M2 Cobalt said it had now satisfied all outstanding conditions for the drawdown of the US$3 million working capital facility from Jervois, which will be used to fund the continuation and expansion of the initial drill program and the next phase of exploration. The funds are set to be used for the continuation and expansion of its initial drill program and the next phase of exploration.

The drill program will expand work undertaken at the Waragi and Nile targets, with up to 3,000m of drilling planned to systematically test the large regional cobalt/copper geochemical anomaly discovered across the Buajagli licenses in southern Uganda during 2018.

Under the definitive agreement signed in January, the two companies will merge via an all-market transaction whereby each common share of M2 Cobalt will be exchanged for one common share of Jervois.

Jervois launched a friendly merger with the M2 Cobalt back in January, giving the company a “transformational” foothold in Uganda through the historical Kilembe copper-gold mine.

Meanwhile, M2 Cobalt and Jervois have annoucned that the newly combined company is merging with Idaho cobalt company eCobalt Solutions Inc. The newly formed company will have projects in Australia, East Africa and the US, including eCobalt’s Idaho Cobalt project, which boasts the highest combination of cobalt grade and scale in North America.

The combination will involve the acquisition of all of the issued and outstanding shares of eCobalt and will not impact the previously announced merger of M2 Cobalt and Jervois, the company said in a statement.

"We are fully supportive of Jervois undertaking a transaction with eCobalt, and look forward to securing eCobalt's high-grade Idaho Cobalt Project for the combined group,” said Mr. Clarke.

“The combination with eCobalt advances our combined goal of building the pre-eminent, mid-tier, multi-jurisdictional battery materials supplier and secures one of the highest quality cobalt deposits globally.”

Govt Must Stop Violating Laws On Oil Revenue – Civil Society

The continued misuse and violation of oil revenue laws in Uganda by the executive arm of government has irked members of Civil Society Organizations (CSOs). The CSOs now want parliament to find a solution even if they feel legislative arm of government has failed to use its oversight powers to ensure compliance to oil revenue laws for the benefit of the citizens.

The CSOs under the headship of Africa Institute for Energy Governance (AFIEGO) last month at a meeting commenced a solution seeking discussion following government’s withdrawal of Shs200billion from the Petroleum Fund in March 2019 without parliamentary approval to reportedly fund deficits in the 2018/2019 budget.

The other CSOs which participated in the meeting included National Association of Professional Environmentalists (NAPE), World Voices Uganda (WVU), Center for Constitutional Governance (CCG), Guild presidents Forum on Oil Governance (GPFOG), Green Organisation Africa, Girl Power Foundation, Kanungu Youth and Women Empowerment Group, Oil Refinery Residents Association (ORRA), Kakindo Orhpans and others.

LACK OF COMMITMENT TO TRANSPARENCY

This act by government, the CSOs say, is against provisions of the Public Finance Management Act of 2015 which provides for how oil revenues are supposed to be spent. A communique shared by these Civil Society Organizations points out that apart from violating the Public Finance Management Act, the executive lacks commitment to transparency even if Uganda joins the Extractive Industries Transparency Initiative.

“Since 2015 when the Public Finance Management Act was put in place, government has ignored the need to put in place a framework to guide how oil revenues from the consolidated fund and national budget shall be used for development as opposed to consumption. Instead, government continues to withdraw oil revenues even without parliamentary approval,” reads part of the communique.

They also fault Public Finance Management Act (PFMA) of 2015 for failing to separate oil revenues from other revenues even though it emphasizes that oil revenues shall only be invested in infrastructure and development projectsAt what stage can the government separate oil revenues from the rest of the revenues in the Consolidated Fund to ensure it is not spent on consumption such as creation of districts, paying RDCs and others?” they question.

EXCESSIVE POWERS TO THE MINISTER

The other issues these CSOs raise is that the same Public Finance Management Act gives excessive powers to the minister under sections 56(3), 64(3), 65(1), 67(2&7) and 68, including overall powers to manage Petroleum Fund, making agreements, deciding to issue policy guidelines and appointing of members of the Investment Advisory Committee.

The CSOs believe that Uganda needs a strong law that provides for personal liabilities against those who use their positions to enrich themselves at the expense of the public. It is at this point that they castigated government failure to implement recommendations from Parliament's Commissions, Statutory Authorities and State Enterprises (COSASE) committee on Shs6 billion “presidential handshake” including possibly refunding the stolen money.

AMEND T PUBLIC FINANCE MANAGEMENT ACT 2015

As a recommendation, the CSOs want parliament to use her oversight powers to pressure the Minister of Finance to table a bill to amend the Public Finance Management Act 2015. After the amendment, the new law should provide for the establishment of a well-represented independent multi-stakeholder accountability committee (IMAC). The law should also specify the terms of reference (ToRs) of the multi-stakeholder accountability committee, enforcement, membership criteria, remuneration and how to punish offenders. The minister, according to this arrangement will be required to report to IMAC every after 30 days. The amendment would also require that government to implement all parliamentary recommendations regarding oil revenues within a period of 6 months from the date of tabling and provide for personal liability for government officials including the minister if his or her actions lead to loss of revenues without reasonable defense.

REFUND WITHDRAWN OIL REVENUES

The other recommendations from the CSOs are that government should urgently refund the Shs200 billion and other oil revenues withdrawn from the Petroleum Fund in contravention of the oil revenues laws and transparency best practices; withdrawals from the Petroleum Fund should be halted until amendment of Public Finance Management Act 2015; consider an EITI law before completing the process of becoming a member and rest powers to oversee withdrawals from the Petroleum Fund and investment of oil revenues into hands of  IMAC but not the minister. They also want CSOs to increase their efforts to sensitize the public about available oil revenues and mobilise them to call for the amendment of the Public Finance Management Act of 2015, appointment of investment advisory committee members, voting of the IMAC and others in order to create enough public pressure for transparency.

Why Uganda Should Prepare To Reap Big From Approaching Cannabis Market

The world is opening up and becoming more ‘accommodative’ towards medical cannabis trade as its market size continues to expand. Researchers each day discover more benefits from the largely prohibited herb.

While the global market for cannabis was estimated to reach a value of US$ 13.4 Billion in 2018, it is further expected to reach the value of US$ 44.4 Billion by 2024, exhibiting a Compound Annual Growth Rate (CAGR) of 22.9% during 2019-2024.

Cannabis is a psychoactive drug which is derived from the cannabis plant of the Cannabaceae family. It has been used medicinally for several years in ancient Indian, Chinese, Egyptian and Islamic cultures.

Treating A Wide Range Of Diseases

Nowadays, cannabis finds application in the treatment of a wide range of diseases and symptoms including cancer, chronic pain, depression, arthritis, diabetes, glaucoma, migraines, epilepsy, MS, AIDS, ALS, Alzheimer’s, PTSD, Parkinson’s, Tourette’s, etc.

Owing to its therapeutic benefits, cannabis has been approved for medical use in numerous countries, with varying degrees of legal restriction. Some of these countries include Argentina, Brazil, Canada, Chile, Colombia, Czech Republic, Germany, Italy, Mexico, Spain, United Kingdom, United States, Uruguay, etc.

Clinical trials, R&D activities and commercialization of cannabis-based indications are further expected to catalyze the growth of the market. Cannabis is safer and has less severe side effects in comparison to other treatment options.

It also finds usage along with other treatments either to enhance their effect or to combat negative side effects. For instance, cannabis is very effective in reducing nausea and increasing appetite among the chemotherapy patients, making the agonizing treatment more tolerable.

Similarly, it is also used in combination with traditional opioid painkillers, which enables patients to significantly reduce the dosage and frequency of opioids, and also imparts greater pain relief.

A steadily rising ageing population has also played an significant role in driving the demand for medical cannabis as geriatric patients are more likely to develop chronic illnesses and require more physician visits.

Although expenditure on health products are less susceptible to fluctuations in consumer’s expenditure, the uptake of medical marijuana is liable to changes in disposable income due to its unconventional nature. As a result, we expect increasing disposable incomes to create a positive impact on the demand of medical cannabis.

Cannabis in Uganda

Health Minister Jane Ruth Aceng told a press conference at Uganda Media Cente recently that growing of marijuana or cannabis is illegal but negotiations are underway to legalize it with proper legislation and regulation.

Global companies have expressed interest to do medicinal marijuana business with Uganda but the ministry of health has sat on this breakthrough in the guise of undertaking policy research and regulation formulation.

According to a news report by Daily Monitor, Uganda is set to export medical marijuana products to Canada and Germany worth Shs600b in June. It has also emerged that on December 7, 2017, Uganda exported unrefined cannabis buds/ flowers to South Africa’s National Analytical Forensic Services in Pretoria. The order to Industrial Hemp (U) Ltd, a private company, was valued at $10,000 (Shs37.1m).

The marijuana exports from a farm in Kasese District include Cannabinol (CBD) and Tetrahydrocannabinol (THC) with mixture of 2.7mg THC and 2.5mg CBD for Sativex drugs approved in USA, Europe and Canada. Oil Risin contain Dronabinol for making Marinol and syndros capsules and CBD enriched creams for various skin disorders.

Mr Benjamin Cadet, one of the directors at Industrial Hemp (U) Ltd, a private firm jointly working with an Israel company, Together Pharma Ltd, confirmed medical cannabis orders from at least 20,000 pharmacies in Canada and Germany.

“We signed annual supply contracts with pharmacies in Canada to a tune of $100m (Shs371.8b) and €58m (Shs242.3b) for Germany… the current contracts run for 10 years but along the way, we shall expand to satisfy future demand,” Mr Cadet said.

Marijuana companies have reportedly submitted in their bid to ministry of health seeking licensing; the ministry is yet to respond to them with a positive response. These include Industrial Hemp (U) Ltd, Together Pharma Ltd and Natgro Phama (U) Ltd.

Others are Medraw (U) SMC Ltd, Urban Properties (U) Ltd, Prime Ranchers, Silver Seeds (U) Ltd, Dave and Dave Group, Seven Blades, Cannops Africa, Quest Worths International Group, Premier Hemp, Sativa Agro-tech Ltd, Zeus Agro Ltd and Owesia U Ltd.

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