25 January 2013

Uganda: Citizens Demand Bigger Role in Oil Value Chain

Uganda should investigate the causes of the resource curse that has afflicted many countries. The country can then direct resources to the oil value chain so that the discovered oil and gas can benefit the country, a top industrialist has said.

Prof Charles Kwesigwa, the chairman of the Association of Uganda Oil and Gas Service Providers, said Uganda should also adopt best practices from other countries. He added that negative feelings towards the industry should be eliminated because Ugandans are entitled to a good life and the conditions are ripe for it.

Kwesigwa, also the boss of Uganda Industrial Research Institute, cited Norway as a classic example of how well resources can be used to transform the lives of people. Norway is at the top of the world human development index.

During a roundtable discussion with media and industry leaders, Emmanuel Baluti, the association lawyer said although the recently passed legislation on oil and gas would go some distance in addressing local content issues their push for a 51% cap on local content was rejected.

Local content refers to the need to include Ugandans in the oil value chain. For instance, some services such as transportation can be provided by a Ugandan firm. "Parliament ceded to 48% because of pressure. As an association, we feel that if any local content is capped at below 50%, there is little Ugandan majority. Fifty-one precent is not as radical as 71% (Angola and Nigeria)," said Baluti.

He said they would continue to push for amendments and lobby for changes. Although the indigenous Ugandan  industry still lacks capacity, they would push for alliances that would enable joint bids.

The association was formed in 2012 with the intention of sensitising people and ensuring that the gains of the oil resource trickle down to the indigenous Ugandan. There were reports that some licensed oil firms in Uganda had threatened to sue some local entities if they became part of the local gas and oil lobby groups.

Experts have advised that the value chain processes of catering, welding, setting camps and would provide employment and earning to Ugandans away from the final upstream process. But there have been reports of even these smaller jobs being extended to foreign interests.

The association members have asked the Government to ensure that both licensed firms and the Government  help in bridging the capacity gap so that this is not used as an excuse to push out indigenous firms since this is  a new industry. Kwesigwa asked the country to pull together and avoid negativity to benefit from the rare but finite resource.

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