Second national content conference: minister roots for local suppliers in oil and gas sector

Issued by: Petroleum Authority of Uganda

A government minister speaking at a dais at a conference
Mary Gorreti Kitutu, the minister of energy and mineral development, delivering the keynote address at the second national content conference held in Kampala on 17 and 18 March, 2020. Photo: Courtesy

The minister of energy and mineral development, Mary Goretti Kitutu, has echoed the need to have local Ugandan companies awarded contracts in the oil and gas sector, ahead of foreign entities.

Dr Kitutu (made the remarks while officially opening the two-day 2nd National Content Conference organised by the Petroleum Authority of Uganda (PAU) at the Kampala Serena Hotel.

“Just like you have heard other leaders root for their countries first, Ugandan Companies should be considered first in every contract awarded in the Oil and Gas Sector. Uganda should come first in everything,” stressed the Minister.

Dr Kitutu (Ph.D.) also pointed out that the minerals, oil, and gas sector has been prioritised by the government because of its multiplier effect on the economy, as detailed in the National Development Plan III. The other priority sectors include tourism, agriculture, infrastructure, and human capital development.

“In line with the goal of the national oil and gas policy for Uganda of using the country’s oil and gas resources to contribute to early achievement of poverty eradication and to create lasting value to society, cross-sectoral linkages are considered a key component in the management of the sector,” said Ms Kitutu.

Ms Kitutu also revealed that the energy ministry, as the lead agency in the development of national content, has established a multi-sectoral local content steering committee responsible for overseeing the implementation of the local content policy. She said the private sector is represented on the committee through the Association of Uganda Oil and Gas Service Providers.

“Government is reviewing the principles for the establishment of the local content fund, which is meant to provide Ugandan businesses with affordable financing. All the required consultations will be undertaken during the establishment of the fund,” said Ms Kitutu.

Ernest Rubondo, the executive director of the Petroleum Authority of Uganda, noted that the first national content conference held last year had made recommendations on how to enhance local content in the oil and gas sector.

“The takeaways from last year’s conference which we have acted on are: supporting of enterprise development and building competitiveness, increasing value retention in procurement, and certifying and accrediting training institutions in collaboration with the ministry of education and sports,” Mr Rubondo said.

This year’s National Content Conference sought to enhance the agenda of working together with other sectors, and was held under the theme “Linkages Between Oil and Gas and Other Sectors of Uganda’s Economy: Opportunities and Challenges.”

These linkages include those currently under implementation, those that are still being defined, and those yet to be described.

Linkages under implementation include land use planning, which was commenced in 2011, security, education and skills development, and transportation and infrastructure.

Linkages under definition include tourism, health, housing, agriculture, financing, and fiscal systems. Linkages yet to be described include diplomacy, and industry.

In his closing remarks, Mr Rubondo – who read a speech by Robert Kasande, the permanent secretary for the ministry of energy and mineral development — said the conference had discussed linkages between the sectors of agriculture, education, health, infrastructure and transport, land use planning, tourism, and financing.

Mr Rubondo also noted that several interventions have been undertaken by both the government and private sector, although a lot more effort is needed as highlighted in the way forward (below).

He added that the final investment decision is simply an event and that what is important in the meantime is to make adequate preparations to effectively participate in the oil and gas sector.

The way forward: resolutions from the second National Content Conference

Agriculture

Government/Ministries, departments, and agencies (MDAs)

  • Strengthen capacity of farmers to meet the demand for the oil and gas market; agriculture equipment, quality control, high-value production.
  • Government needs to support smallholder farmers to meet the requirements.
  • Ministry of Agriculture to expedite the roll out of the farmers’ registration process
  • Ministry of Agriculture to scale up the different agriculture support initiatives
  • Continue the engagements between Uganda National Bureau of Standards (UNBS) and farmers from the Albertine Region to sensitize them on the standards in oil and gas
  • There is need to expedite the implementation of the Agriculture Development project for the districts in the Albertine

Farmers

  • Applicants for Agriculture Credit Facility need to ensure adequate preparation, to reduce cases of delayed disbursements.
  • Farmers need to build, strengthen, and formalize their Associations.
  • There is need to sensitize the farmers on the availability of the regional market to absorb surplus production
  • Upgrade the quality and quantities of the produce.
  • Farmers should embrace Ministry of Agriculture’s project of registering farmers which is being piloted in 14 districts but will be rolled out to the rest of the country.
  • Seek Export Promotion Board’s Export readiness assessment service to prepare farmers to identify the challenges and link them up with other ministries for skilling and support.

Private sector

  • Uganda National Farmers Federation to take forward the integrated market & information system that is being developed. Explore options of working with the Ministry of Agriculture on the registration of framers. Education
  • The existing oil and gas training providers to identify with Oil and Gas Trainers Association of Uganda (OGTAU), participate in quarterly skills development dialogues
  • Embrace the existing opportunity to partner with Uganda Manufacturer’s Association (UMA) in skills development and industry attachment.
  • There is need to devise mechanisms to tap the labour export market opportunities especially to Mozambique
  • There is need for continued investment in capacity building leading to international certification
  • Emphasize Gender mainstreaming in vocational training to facilitate equitable gender participation in the oil and gas sector.
  • Embrace stakeholder consultations in the review of the workforce skills development strategy
  • The PAU and Manufacturing sector to collectively define the linkage between Oil and Gas and the Manufacturing sector

Health

  • Government to explore possibility of subsidies to attract Small and Medium Enterprise (SME) investment and support attainment of standards
  • Continue to provide sensitization in the communities on issues on HIV/AIDS, Hepatitis B, Ebola from Congo, and many other diseases.
  • Co-opt the insurance sector players in the discussion on linkages between Oil and Gas and the Health sector
  • Continue efforts to define the linkage between the Oil and Gas sector and the Health sector with the Ministry of Health

Infrastructure and Transport

Emerging issues

  • 2,500 heavy goods vehicle drivers will be required for the 3 projects — Tilenga, Kingfisher Development Area (KFDA) & the East Africa Crude Oil Pipeline (EACOP).
  • 1,200 equipment operators will be required.
  • Influx of people in the region will also build into the demand for transport to facilitate movements within areas of operation.
  • Only 200 Heavy Goods Vehicle (HGV) drivers & 20 instructors have been trained over 3 years.

Opportunities.

  • 30% Value of works to be implemented by local contractors for roads under the Uganda National Roads Authority (over 500 kms)
  • Eight million tons of cargo for development stage will be sourced from regional, international, and local markets and will have to be transported largely by road.
  • Construction of facilities.

Issues to be addressed

  • Availability of equipment for high value works
  • Financing of advanced technology required for the complex projects
  • Availability of qualified and experienced personnel
  • Further investment in training of Heavy Goods Drivers (HGD) to meet the industry demand
  • Need to streamline the licensing process of drivers
  • Adopt the industry requirement during the preparation process
  • Need to examine the readiness of the bodies mandated to regulate and monitor standards, professional development & ethics of engineers, architects, surveyors, and construction practitioners.
  • Embrace knowledge and technology transfer through partnerships with experienced industry players.
  • Local Contractors need to strengthen their Associations; identify the challenges and how to address them as contractors.

Land use planning

  • There is need to consider intersectoral coordination on land use planning aspects
  • There is need to enforce the recommended standards for development; implementation of the approved land use plans
  • Government needs to consider incentives for investors in the Industrial Park as a way of attracting investments to the park.
  • Uganda National Oil Company (UNOC)/the government should plan to notify the public on the availability and allocation criteria of the land at the industrial park
  • Ugandans need to prepare for opportunities

Tourism

Investment areas

  • Accommodation (e.g. hotels, guest houses and motels)
  • Tourism facilities (entertainment, recreation, cultural activities, zoos)
  • Ancillary services (food and beverage and other integrated services used by visitors and residents alike).

Recommedantions

  • The tourism Industry needs to work with the ministry of lands to identify and define the tourism products to be developed in the Industrial Park.
  • Profile all tourism products, develop and make them available to the tourists.
  • Prioritize the recruitment of tourism liaison officers
  • Planned Development: Pursue Flagship Projects and adhere to Local Government Development Planning
  • Uganda Tourism Board to consider promoting and marketing oil as a tourism product( the ‘longest heated pipeline’)
  • There is need for leaders to benchmark from neighbouring countries and appreciate the benefits of tourism.
  • Ugandans need to take the lead and invest in Uganda and grow the Tourism sector.
  • Need for Government to support Bunyoro Kingdom tourism initiatives
  • Need to establish a natural resource task force for Bunyoro region
  • Need to develop a tourism cluster for the Albertine region

Financing

  • Build capacity to acquire and deploy financing
  • Need to tap the opportunities with the business incubator and other similar initiatives
  • SMEs should take trouble to understand conditions attached to financing packages.
  • Have a proper business system and formalise the businesses, have books of accounts in place.
  • Government should devise ways of supporting SMEs in terms of financing, which is still a challenge.
  • Take advantage of the opportunities available at Private Sector Foundation of Uganda (PSFU); SME financing

For more information:
Email: corporateaffairs@pau.go.ug