Uganda: Oil and Gas - Government Moves to Operationalize the National Content Development Fund

As one of the ways of providing affordable credit to Ugandan enterprises in the oil and gas sector, government is in advanced stages of operationalizing the National Content Development Fund. According to the Minister of Energy and Mineral Development, Dr Goretti Kitutu. She shared that the Fund will be operational soon.

"Government is reviewing the principles for the establishment of the Local Content Development Fund which is meant to provide Ugandan businesses with affordable financing," Dr Kitutu said. She added, "All the required consultations will be undertaken during the establishment of the fund."

Dr Kitutu was speaking at the 2nd National Content Conference at Kampala Serena Hotel, under the theme; Linkages between oil and gas and other sector of Uganda's economy: opportunities and challenges on Wednesday March 17, 2020. The National Content Development Fund is provided for by the National Content Policy, 2017.

According to the policy, the fund is expected to support national enterprises that may have won tenders but lack advance payment guarantees or have contracts, which they are unable to finance. The resources from the National Content Development Fund shall be accessed at reasonable interest rates.

"We are also capitalizing Uganda Development Bank [UDB], long term loans are there, go get them with less stress," She said. Dr Kitutu also asked Ugandans to remain hopeful about the sector. "We should not give up hope in the oil and gas sector," Kitutu said. The National Development Plan III prioritizes the minerals, oil and gas sector among the sectors with the greatest potential and multiplier effect on the economy.

"Just like you have heard how others push 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," She emphasized.

HUMAN RESOURCES

Uganda's readiness to partake of the opportunities the sector presents, mainly jobs dominated the two days conference. At the conference, the Petroleum Authority of Uganda (PAU) shared that a total of 700 trained artisans and welders have been internationally certified - making them fit to work in the highly skilled oil and gas sector. The certified welders and artisans will be expected to work on different projects in the oil and gas sector such as; construction of the East African Crude Oil Pipeline Project (EACOP), feeder pipelines, the multi-purpose pipeline from Hoima to Mpigi district and storage terminal among others.

Peninah Aheebwa, the Director Technical Services at the Petroleum Authority of Uganda (PAU) described the number of certified welders as a milestone. "We applaud the training institutions for the job well done. At the moment, we have several internationally certified public and private training institutions. The future is bright for academic institutions," She said. Majority of the welders and artisans have been trained and certified at Uganda Petroleum Institute Kigumba (UPIK).

At a higher professional level, Ahweebwa said 204 Ugandans have graduated with bachelors and master's degree programmes in petroleum geosciences. "Employment in the oil and gas sector will be comprised of 10 percent professional labour, 20 percent casual and 70 percent technical labour," She said.

Benard Ongodia, the Principal UPIK said the institute is up to task. "UPIK is up to the task and will provide the skills the oil and gas industry needs. The Institute is an approved centre for City and Guides, Engineering Construction Industry Training Board (ECITB) and working towards Offshore Petroleum Industry Training Organization standard (OPITO)," Ongodia said.

Ali Ssekatawa, the Director Legal and Corporate Affairs at PAU implored Ugandans to prepare themselves to reap from the sector when the Final Investment Decisions (FIDs) for the projects shall be concluded. "Final Investment Decision [FID] is an event, it will come to pass, the question for us is whether we are prepared when it is announced," he said. Uganda is transitioning from exploration to the development phase with a total investment of $ 29 billion expected to be invested in 3-5 years after FIDs.

None the less, Uganda's journey to development and eventually first oil has become very snaky for good and bad reasons alike. The long delays have been deemed beneficial for Uganda since it was crucial to ensure better preparation and negotiation of a good deal after all. On the side of real-time petro-dynamics, Uganda's projects have been dogged by the ramifications of the time value of money (among other things) whereby the critical decision making moment was missed at the time when the value of oil was averaging well over $ 95 per barrel between 2011 and 2014. The rest is history and Uganda shall have to bear the brunt of current oil price spats and nose-dive; it will get better with time.

More From: Oil in Uganda

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