Local companies have not actively participated in the first lucrative stages of the oil and gas sector, the Petroleum Authority of Uganda (PAU) said recently.
Ernest Rubondo, the executive director of the PAU, said the value for money audit on national content undertaken by the auditor general places the current level of national participation at 28 per cent only.
He explained that in 2017, out of the $133 million spent on contracts, purchase orders and call-offs, only 28 per cent translating to $35 million were undertaken by Ugandan companies, something he said is still minimal.
“The major activities of 2017 involved mainly Front-End Engineering Design (FEED) studies and geophysical and geotechnical studies. These activities were contracted to international companies and undertaken outside Uganda,” he said.
Rubondo added: “Approval of these FEED studies will usher in the engineering, procurement and construction phase of the projects where the bulk of opportunities for employment, technology transfer and enterprise development lie.”
With close to $20 billion expected to be invested in the development of these oil and gas projects over the next five to 10 years, PAU feels it is critical to ensure that a significant portion of the opportunities are domesticated within the country.
The process involved PAU working closely with the Uganda Revenue Authority, the Uganda Registration Services Bureau and National Social Security Fund in the verification of entities and persons domiciled in Uganda and with the respective foreign missions through the ministry of Foreign Affairs in the verification of the foreign entities.
The National Supplier Database (NSD) for the oil and gas sector is one of the initiatives put in place to achieve the country’s objectives of local participation. This process attracted 774 applications out of which 513 qualified for registration on the NSD in 2017.
Rubondo said the NSD improves efficiency in the supply chain through reducing procurement lead times and achieving a cost-efficient procurement cycle.
“It gives visibility to potential suppliers, more so the Ugandan suppliers who may have found it difficult to be known or even those who are newly established,” he said.
Rubondo further explained that: “Apart from transparency in the procurement process, it also supports the establishment of joint ventures between firms to build and enhance capacity.”
When companies realized that the registration was a needed requirement, the number of applications received increased from the 774 in 2017 to 2,558 so far in 2018, and subsequently the number of registered entities increased from 513 to 1,712 this year.
Some 716 foreign companies, up from 135 last year, have registered. The majority of these are Chinese, British, French, Saudi, Nigerian and Kenya firms while there are 996 Ugandan-owned companies this year ready to provide oil-related services, compared to only 378 last year.
“The foreign-registered entities are from 44 other countries with China having 149 companies, United Kingdom 61, France 47, United Arab Emirates, Nigeria and Kenya with 33 companies,” he said.