Skip to main content

OIL: WE NEED TO GET OUR ACT TOGETHER… YESTERDAY


(Published February, 2017)

We are on the cusp of an important period in the history of this country and whether we can derive maximum advantage from this will depend on our capacity to put aside petty rivalries and come together as the business community.

Over the next three years at least $20b or almost the size of the entire economy will be spent in readying us for first oil. This money will be spent on building infrastructure in the oil bearing areas of western Uganda, on our side of the oil pipeline to the Tanzanian port of Tanga, on the oil refinery and any number of things that will be needed to support oil production.

About $3b (sh11trillion) was spent during the exploration phase of which less than three in every ten shillings  or about sh3trillion went to local contractors and suppliers. But this happened over eight years.

This despite our local disorganisation and ignorance of the industry and its dynamics.

However we should not be content with taking pennies off the table. You do not go to the river to fetch water with a teaspoon.

The question then becomes how do we prepare to take advantage?

Not to belabour the point but the exploitation of Uganda’s oil and gas resource is going to be the biggest investment opportunity in this country’s history and for a long time to come.

The exploitation phase should have served as a rude awakening of how deficient we are in capacity to play a major role in the sector.

Just as an example preliminary estimates are that we will need at least 2,000 trucks of certain specification to service preparatory work. An audit of our internal capacity showed that we could only marshal a tenth of the required number as a country, trucks which meet the industry’s health and safety standards. As if that is not each truck will require at least a three man crew, drivers with international driving certification. Our local numbers in term of drivers was worse than our deficiency in vehicles.

These shortfalls show up at every level of engagement that we would be interested in in a meaningful way.

The Private Sector Foundation of Uganda (PSFU) of which I am chairman has been studying this issue long and hard.

We are glad that the basic legal framework for promotion of local content has been embedded in the law and the regulations have been drafted pending discussion and approval. They are not perfect and maybe even fall short of what we want but they are a good start, something we can work with.

The real challenge as stated above is our lack of capacity.

In that direction PSFU is looking to rally all potential suppliers and contractors, build a data base which beyond just identifying them will among other things document their capacities. The database will also outline what the members are looking for – equity partners, debt financing, joint ventures or any number of permutations of their interest in the sector.

One thing we have learnt is that for all our businessmen it cannot be business as usual. We need to regularise and formalise our business if we are to supply the sector, work in the sector or even be attractive to potential partners.

To help in that direction too we have funds under the Businesses Development Services (BUDS) that can help our business improve their internal capacities, sponsor the building of stronger industry networks and facilitate lobbying in order for us to rise to the next level.

This effort will be useful not only in establishing this data base but in strengthening our ties as private sector players.

This is important. We should not take it for granted because the oil is in our country we will get a fair shake from the established industry players. Billions of dollars have been committed to this project and plans are being drawn up to exploit our oil resources with or without our meaningful participation.

We know that government has agreed on very favourable terms for the country in the Production Sharing Agreement (PSA). There is more they can do but they may need some nudging to strengthen local content laws and regulations.

That is government. We too have a responsibility to maximise how much of these funds stay within our borders.

It will take hard work, a changing of our business culture and a willingness to work together to even stand a chance. But this what we have to do to seat at the table. The truth is time is not on our side and the faster we get going the better.

Labels:

Comments

Post a Comment

Popular posts from this blog

NOT ONLY THE HARDWARE BUT THE SOFTWARE TOO

In the middle of September the United Nations released its annual Human Development Indicator (HDI). This index serves as an indicator of the quality of life of a country’s people by measuring the health, education, inequality, poverty and security standards. Aside from the statistical measures of development like GDP growth, this is obviously a better measure of how people are actually doing. In this year’s HDI report Uganda was ranked 162 out of 189 countries with a HDI score of 0.516. The index goes from zero to one, the nearer you are to one the better. Our score puts us in the low human development category. But as bad as that sounds we have been worse. In 1990, the earliest year that these figures were compiled our score was 0.311 even the UN recognises that we have improved 66 percent in the last three decades. According to the UN figures life expectancy has risen to 60.2 years   from 45.5 in 1990; expected years of schooling has doubled to 11.6 fr...
Post a Comment
Read more

THE MUKWANO I KNEW

We have lost the greatest Ugandan entrepreneur of our time, Mr Amirali Karmali, more popularly known as Mzee Mukwano. I have known Mzee Mukwano for more than 40 years and most of what I am today is due to him. And I am not alone. "He has helped countless people through school – as he did me. Helped countless more in business – as he did me. And he has been a steadfast friend and source of support to countless more – as he was to me.... I first met Mukwano around about 1977. My mother was the secretary for the chief of operations at Uganda Airlines, a man I knew only as Hamid. Mukwano had come to charter the Uganda Airlines’ Hercules plane and I happened to be around the office then. He was a short man, an unassuming man, but clearly a serious businessman who would charter the plane to bring in goods that were in high demand here. He run a popular whole sale shop in Nakasero – Egesa Commercial Agencies, a beehive of activity and the go-to place for anythin...
Post a Comment
Read more

WE NEED A BETTER SOLUTION FOR KAMPALA TRAFFIC

I am sure I am not the only one feeling it. Kampala’s traffic is becoming increasingly unbearable. Even the removal of roundabouts around the city seem to have an opposite effect to the intended purpose of easing traffic flow in the city. Kampala Capital City Authority (KCCA) has an ambitious plan of flyovers, underground tunnels and railway transport, which should help the cause, I hope. The snarl ups that we are coming fast accustomed to, are not only an issue of teeth grinding inconvenience but have a real cost on our economy by hampering and increasing the cost of doing business. A recent World Bank report suggests that as an economy, we are losing about sh3trillion annually due to traffic jams. The losses come in form of delayed deliveries, higher fuel consumption and the health consequences of seating in a smoke filled environment. To put this in perspective this is the combined budget of the health, agriculture and ICT ministries in this year’s budget. Or ...
Post a Comment
Read more

HOW TO RECOGNISE A PONZI AND NOT FALL VICTIM

Another Ponzi scheme has come crashing down around the ears of hundreds of “investors”. Unsurprisingly. In its recent reincarnation poor Ugandans were lured into a scheme where they bought computer tablets. This entitled them to a monthly pay off, $100, and a Christmas bonus for their children. In this case the unsuspecting investors -cum -victims were being given a share certificate. Meaning you accept to take the part of the risk in this project. Which was inadvertently reducing their burden of risk and liability for the issuing company. I leave that area to smart lawyers to handle.   As is always the case with these things, it’s not quite clear where the pay-out will come from. A common characteristic of these schemes is that you might get initial payments before you starting missing a few and the stories begin. The promoters of these schemes or scams often use the money from the latest entrants to pay the older “investors” until one of two things happen. Either...
Post a Comment
Read more

OUR HISTORICAL SITES SHOULD NOT GO UNATTENDED TO

Recently I was at Makerere University to attend a wedding ceremony. I hadn’t been on the university’s grounds in a while. I was shocked at how run down Mary Stuart and Lumumba Halls were. They are in need of serious work. These thoughts were reawakened with the recent launch of the coffee table book “Beyond the Reeds and Bricks” promoted by the tourism ministry, the cross cultural foundation of Uganda and the European Union Delegation. The book which is aimed at the protection of historical sites and buildings in Kampala, Entebbe and Jinja, is a moving collection of pictures of buildings and sites we know, but probably take for granted when we pass them as we go about our business. "Entebe za Mugula in Entebbe, Mackay’s Cave, the post office in Entebbe, the Stanbic Bank Branch in Jinja, Hamu Mukasa’s house in Mengo, the main building at Makerere , the Bahai Temple, Kibuli mosque and many other sites have pride of place among the 60 pictures in this book, which is ...
Post a Comment
Read more

WE NEED FASTER TURN AROUND ON OUR ROAD PROJECTS

During a recent trip to China I was shocked to find properly paved roads and first class infrastructure deep in the countryside, hundreds of kilometres away from the capital, Beijing. I rode the high-speed railway out of Beijing, doing more than 300 kilometres per hour and I can attest I have never been on anything like it anywhere in the world. Not in Europe. Not in the States. Nowhere. I was blown away and wondered why we can’t at least do a tenth of this at home. I have to say I was pleasantly surprised when I used the Entebbe Expressway from the airport. I was in Kampala in under an hour. The Entebbe road had become a nightmare. I was shaken out of my good feeling when I had to make a trip to Tororo the other day. On my way back I spent two and half hours between Mukono and Kampala, about the same time it took me from Tororo up to Mukono. Clearly there is a lot of work to be done on our transport infrastructure. The full extent we probably don’t appreciate,...
Post a Comment
Read more