Kampala — As government moves towards the production phase of oil from the Albertine region, insurance companies in Uganda have announced that they will jointly cover risks in the oil and gas sector.
Addressing journalists at Kampala Serena Hotel on Wednesday, the chairman of the oil and gas sector at the Uganda Insurers Association (UIA), Mr Azim Tharani, said the risks associated with the sector are enormous.
The consortium will enable the insurance service providers to handle oil and gas risks within Uganda.
"There are complex and difficult risks that require huge amounts of money and therefore as an association, we felt that it was better for us to combine our capacities," Mr Tharani said.
Mr Tharani told journalists that with the aid of Insurance Regulatory Authority, they have been able to ensure that the Oil and Mineral Act which covers the issue of local content including insurance supports the companies to specifically cover insurance of oil and gas risks in Uganda.
While the 17-member consortium may retain a very small portion of the risks, the insurers project various benefits that will come in handy such as technological transfer, capacity building and eventually financial capacity to start underwriting the risks.
According to the chief executive officer UIA, Ms Miriam Magala, the insurers are currently engaging the finance committee in Parliament to ensure the syndicate has exclusive underwriting of all oil and gas risks in Uganda.
Commenting on the current insurance penetration of 0.85 per cent, UIA chairman, Mr Deepak Pandey, decried the high taxes levied through stamp duty and Value Added Tax. "We are pushing for a complete exemption of taxes so that people can be able to buy insurance," he said.