Uganda: Auditor General Asks PAU to Expedite the National Content Monitoring System

In a new report, the Auditor General (AOG) of Uganda has appealed to the Petroleum Authority of Uganda (PAU) to expedite development of the National Content Monitoring System for the oil and gas sub-sector. The request is contained in the Auditor General's report to parliament for the period ending June 30, 2019.

"The Petroleum Authority of Uganda should expedite development of the National Content Monitoring System for better tracking of National Content achievements by companies sub-contracted by the International Oil Companies [IOCs]," the report read in part.

The report also paints a picture of limited preparedness of Ugandans to partake of the jobs the oil and gas sub-sector presents. It implores the PAU in consultation with government agencies who work closely with the oil and gas sub-sector, to identify the key skills gaps which need to be filled to improve value addition by the said entities' staff to management of the sub-sector, and prioritize their training using the training funds from the oil companies.

FOLLOW UP

For starters, this was a follow up of the 2015 audit on the status of implementation of National Content in Uganda's oil and gas sub-sector. The 2015 audit identified gaps in the enforcement of local content in the purchase of Ugandan goods and services, employment and training of Ugandans, and criteria for determining state participation in the production of petroleum resources. The audit made several recommendations which, if well implemented, were expected to maximize benefits for the country from the extraction of petroleum resources.

Four years after the audit, upstream field developments and construction of the East African Crude Oil Pipeline (EACOP) are yet to commence. These are the most cost and labour intensive stages of the oil and gas sub-sector, with numerous opportunities to optimize procurement of local goods and services from locals, as well as provision of up to 13,000 direct jobs.

However, in this latest report, the Auditor General (OAG) sought to determine the extent of implementation of the 2015 Audit's recommendations and the National Content performance since then. In the report, the Auditor General notes that whereas Ministry of Energy and Mineral Development (MEMD) was responsible for coordinating and enforcing national content implementation in the oil and gas sub-sector up to 2015, the responsibility was shifted to the Petroleum Authority of Uganda (PAU) starting in 2016. Further recommendations were then made with the aim of addressing any issues that may still be outstanding.

INROADS

The latest report credits the Petroleum Authority of Uganda (PAU) for the strides in addressing the major national content issues, the 2015 audit highlighted. "It was established that out of the 34 key audit recommendations made in the Auditor General's report of 2015, 10 were fully implemented, 17 were partially implemented and 7 of the recommendations were not implemented," John Muwanga notes in the report.

Among the achievements since the 2015 audit report was the approval of the National Content Policy in 2018 by Cabinet, enactment of Petroleum (Exploration, Production and Development) (National Content) Regulations, 2016, with National content provisions and targets in procurement, employment and training of Ugandans among others.

The Petroleum Authority of Uganda has also since put in place the National Supplier Database (NSD), developed the National Oil and Gas Talent Register (NOGTR) and conducted sector-specific capacity needs analysis among others.

The Authority has developed the Agriculture Development Program, 2019 that seeks to identify the capacity gaps and interventions required to enable Ugandan suppliers fulfill the food requirements and standards of the sub-sector sector. "Some Ugandan institutions have been accredited as centres for international certifications relevant to the oil and gas sub-sector," the report reads in part.

GLASS HALF FULL

The report further notes PAU should define and enforce promotion of "value addition" in relation to Regulation 17(4) of the National Content Regulations, especially where shareholding is mostly by foreigners, and engage CNOOC Uganda closely to ensure it is on track to meet the National Content targets as stipulated in the law.

Much as the efforts by the Auditor General and the PAU are commendable overall, there is equally vital need for having strong capacity and vigilance among stakeholders interacting with sub-sector. This would have serious monitoring and reporting on compliance or non-compliance in real time, which can go a long way in influencing (positively) the practice of key players in the sector.

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