KAMPALA: Giving a keynote speech at the National Content conference held at Serena Hotel, Kampala on Tuesday, June 28, and Wednesday, June 29, 2022, Hon. Ruth Nankabirwa, the Minister of Energy and Mineral Development said the Oil and Gas sector has been prioritized among the sectors with the greatest multiplier effect on the economy as detailed in the National Development Plan (NPD) III. The other sectors include tourism, agriculture, infrastructure, and human capital development.
Nankabirwa made these remarks at a two-day conference hosted by Petroleum Authority Uganda (PAU). The conference focused on showcasing opportunities in the development phase of the oil and gas industry, by providing a platform for the licenced oil companies, together with their contractors and sub-contractors, to present and exhibit their products, services, and opportunities. The conference was held under the theme: ‘Creating Lasting Value Through Enhanced National Participation to Accelerate Uganda’s Socioeconomic Transformation.’
With the Oil and Gas industry transitioning from the exploration and appraisal stage to the development stage leading to production, there is a need for the country to take necessary steps to put in place enabling legislation to ensure that all the gains projected from the sector come to fruition.
“It is important that the strategies to enhance value retention are concretized to ensure that the Oil and Gas sector transforms the social and economic lives of Ugandans,” Hon. Nankabirwa added.
It is no doubt that soon, Uganda will become an oil-producing country, and the use of the country’s oil and gas resources will contribute to the early achievement of poverty eradication and the creation of lasting value to society.
So far, the government has started to reap benefits from the petroleum sector.
The Ministry of Finance, Planning and Economic Development Permanent Secretary- Ramathan Ggoobi said Government has benefited from Tax Revenue from the Petroleum sector.
Ggoobi said that according to the PAU’s Upstream Benefits report for the period 2017 to 2019, the direct benefits to the Government in form of Tax revenues were Ugx 212.7 billion and Non-Tax Revenue (NTR) of Ugx 22.1 billion while the indirect benefits to Ugandan Nationals were realized in form of; Procurement of locally produced goods and services Ugx 161.2 billion, Employment of 247 Ugandans earning salaries amounting to Ugx 85.6 billion, Training of Ugandan Nationals in the private sector, Government and in the Oil Companies costing Ugx 12.9 billion and, Social corporate responsibility engagements costing Ugx 0.76 billion. The total expenditures by the international oil companies in Uganda during the period 2017 to 2019 were well above Ugx 495.2 billion.
Adding that while the above contribution is impressive, Ggoobi noted that the employment rate is still way below the target of 161,000 jobs targeted in the National Content Policy for Petroleum Sector in Uganda, 2017 of which 14,000 was expected to be direct jobs, 42,700 indirect jobs, and 105,000 induced jobs.
He suggested that the employment shortfall can be addressed if fast-tracked and reported on annually by PAU working closely with other stakeholders. “Government is fully committed to supporting PAU in this endeavor,” Ggoobi added.
Of the 161,000 jobs targeted in this workforce, 15% are estimated to be professionals (engineers and managers), 60% technicians and craftsmen, and 25% unskilled laborers.
Giving insights about the oil and gas investment advancement, PAU Executive Director Ernest Rubondo said investment in the sector grew from US$ 180 million in 2020 to US$ 500 million in 2021 and is projected to grow to US$ 3 billion this year (2022).
Rubondo revealed that during 2020, Ugandan companies were awarded contracts worth US$ 10.7 million in the country’s oil and gas sector. “In 2021, the value of contracts awarded to Ugandan companies in the sector increased to US$ 200 million, an increase of almost 20 times,” he added.
The value of contracts to be awarded to Ugandan companies during 2022 is projected to be more than US$ 1 billion, five times the value last year.
Noting further how Uganda can reap more financial benefits from the sector, Rubondo said, “benefits from oil and gas sector can be increased from the revenues which are to be generated, and the participation of Ugandans (National Content)”.
Listing a range of look-ahead activities that contractors and subcontractors need to focus on, Peninah Aheebwa, the Director of Technical Support Services at PAU said there is a need to maximize utilization of Ugandan goods and services, increase employment of Ugandans, and more skill development.
She also urged all contractors and subcontractors to seek partnerships and collaborations to reach out to the various opportunities that are in the development stage of the oil and gas sector.
“Uganda’s oil and gas sector is continuing to grow in the development phase, so there are many opportunities,” Aheebwa remarked.
Uganda’s petroleum resource journey has been long; since 2006 when the first discovery was made. Since then, the country has been developing Policies, Laws, and Regulations to ensure efficiency and effective exploitation of Petroleum resources.
As the sector ushers in the development stage, the Government has developed a sound framework to ensure effective participation of Ugandans and East Africans before the benefits are provided to other Nationalities. This is to benefit Ugandans as exemplified by the growth of the beneficiaries in terms of employment and contracts for the provision of services.
Therefore, the third Annual National Content Conference is being held at a very opportune time, when the country is witnessing the opening up of opportunities for Ugandans and Ugandan enterprises, at a scale that has not been witnessed in the country before.
To ensure the continued promotion of local content, the Government is committed to ensuring that the goal of the Local Content Policy of increase in participation of Ugandan citizens and enterprises in the oil and gas industry in Uganda from the current 28% to 80% local content by 2040 is met.