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Ugandan Firms Get Shs1.5 Trillion In Oil & Gas Supply Deals

Local suppliers are likely to earn over 150 billion shillings from supply of goods and services to the oil and gas sector in 2018.

Petroleum Authority Executive Director, Dr Earnest Rubondo confirms that the Authority approved work programmes for local companies to the tune of $400m (Shs1.5 trillion) for the supply of goods and services in oil and gas, URN reports.

Rubondo told journalists in Kampala on Thursday that this is part of the efforts to implement the local content policy which was approved by cabinet in June this year.

The Petroleum Authority of Uganda (PAU) is a statutory body established under the Petroleum (Exploration, Development and Production) Act 2013 to monitor and regulate the exploration, development and production of the oil and gas sector.

There have been concerns that foreign firms are dominating the supply of goods and services in contravention of the local content requirements.

Efforts to ensure local participation in the oil and gas sector supply could enable them to cash into the anticipated $20 billion investment into the development phase as the country races for first oil in 2020.

The Petroleum (Exploration, Development and Production) (National Content) Regulations 2016 require any licensee, contractor and sub-contractor to give priority to goods and services that are produced and available in Uganda and which are rendered by Ugandan citizens and companies.

Participation by Ugandan firms has however been minimal during the exploration. Official records indicate the international oil companies invested over $3.5bn during the exploration phase.

Energy Ministry statistics indicate that between 2010 – 2013, the oil companies spent a close to two billion dollars on the purchase of goods and services but only $ 329.9 million was paid to Ugandan service providers, representing only 28% of the total spent by the licensees’ in the country’s oil and gas sector.

The Value for Money Audit on National Content undertook by the Auditor General said Uganda has managed to attain only 28% national participation over a 12-year period.

Dr Rubondo said the Authority has embarked on efforts to increase local participation from current 28% to 80% 2040 as par the local content policy.

Rubondo advised national companies intending to supply in the oil and gas sector to focus on technical services such as legal and engineering aspects which he says pools a lot of money compared to others such as catering companies.

Ugandan firms have offered goods and services in legal services, Freight Forwarding and customs clearance, waste collection services, Assorted Personal protective equipment, Catering Services, survey, engineering services among others.

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