WHY DO YOU THINK SUSTAINABLE LOCAL CONTENT POLICY IS NECESSARY IN AFRICA’S OIL AND GAS INDUSTRY?
Oil & Gas is a key source of revenue for most of Africa’s oil rich economies. The biggest challenge faced by those 19 resource rich countries is the struggle to transform the benefit from the Oil & Gas sector, beyond the windfall taxes and loyalties, into long-term sustainable economic development outcomes.
Personally I believe that sustainable local content policies are the solution to the translation of the Oil & Gas windfall into tangible economic benefits to support other sectors of the economy and in effect contribute to sustainable economic growth to remove the paradox of “rich countries with poor people.
HOW CAN A SUSTAINABLE LOCAL CONTENT PROGRAM BE IMPLEMENTED IN THE AFRICAN OIL AND GAS PRODUCING COUNTRIES? WHAT HAS BEEN THE KEY HIGHLIGHTS OF UGANDA’S EXPERIENCE TO DATE?
Uganda as a country has taken various steps to ensure its Oil & Gas resource is effectively extracted and efficiently managed for the benefit the country and all Ugandans. Uganda developed National Oil & Gas Policy 2018 shortly after the discovery of commercial oil quantities in 2006, which among other things, led to the enactment of the Petroleum Acts for the Midstream and Upstream in 2013. In addition, Uganda carried out an Industrial Baseline Survey in 2013 that analyzed the national capacity to supply the oil & gas industry with skills, goods & services. The Industrial baseline Survey also informed the local participation incorporated in the Oil & Gas National Content Regulations of 2016. What is required now is the effective implementation of the laws and regulations and more specifically the National Content Regulations. To achieve this, the country needs to build its human and supplier capacity to effectively manage and participate in the oil & Gas sector.
The National Content Regulations also include provision to give first priority to procurement of goods and services from Ugandan companies and first priority to be given to Ugandans for employment.
There is also a need for all companies that intend to supply goods and services to the Ugandan Oil & Gas Sector to be registered on the Uganda National Supplier Database. This has helped to reduce enclave development where all goods and services needed by the sector are imported, all employees are foreign, all extracted material is sold unprocessed and there is little resulting benefit to the host economy beyond taxes and royalties.
WHAT ROLE CAN LOCAL ENTERPRISES PLAY IN PROMOTING A SUSTAINABLE LOCAL CONTENT POLICY IN AFRICA’S OIL AND GAS INDUSTRY?
In Uganda 16 types of goods and services have been ring-fenced to be supplied by local enterprises. These include
(a)Transportation (b)Security. (c)Foods and beverages. (d)Hotel accommodation and catering. (e) Human resource management. (f)Office supplies. (g)Fuel supply. (h)Land surveying. (i)Clearing and forwarding. (j)Crane hire. (k)Locally available construction materials. (l)Civil works. (m)Supply of locally available drilling and production materials (n)Environment studies and impact assessment. (o)Communications and information technology services (p)Waste management, where possible.
In addition, the National Content Regulations advocate for joint ventures where goods and services cannot be provided by a Ugandan companies. For major Contracts like EPC that are contracted to foreign companies, there is a provision to subcontract of all work that can be done by Ugandans to Ugandan entities and there are provisions for knowledge transfer.
Ugandan companies have to upskill their standards to meet the requirements of the Oil & Gas Sector and where there are gaps, to ensure they are closed through self-initiatives or via oil company supplier development programs. This will go a long way to retain value within the Ugandan economy where the proceeds are reinvested to grow the sizes of those companies that allows them to grow and carry out bigger contracts at an improved standard and transfer those standards to other sectors of the economy.
WHAT ARE YOUR EXPECTATIONS FOR THE 2019 AFRICAN LOCAL CONTENT SUSTAINABILITY SUMMIT?
To me, the most important expectation is to learn from each other, create synergies and enable investors (FDI) understand the different local content dynamics within the different countries and plan to achieve them accordingly. African oil projects have attracted substantial investment due to their cost competitiveness versus those in other regions of the world. What this summit can best achieve is to create awareness and ensure value retention within the African economies from their Oil & Gas Resources.
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