This week on Tuesday 1st February 2022, there was an earthquake in Uganda. Granted seismic waves did not pass through the ground, but they might as well have. Uganda hosted important dignitaries at the Kololo Independence grounds. Multinationals and VVIPS were there. That’s right, they did not send their representatives, they were here in person; the global CEO & Chairman of Total Energies and Chief Executives of CNOOC. Those CEOS run companies that have a balance sheet bigger than our ka Uganda. They move in private jets and have powers close to a President’s.
What was happening was even more significant; the Final Investment Decision (FID) was being sealed. Let us break this down for you. So, we all know Uganda is gifted by nature. Uganda is blessed with more than 50 types of minerals and ranks one of the highest in Africa. From Gold in Karamoja to wolfram/tungsten and steel in Kabale it is a wonder that “we are all not chilling with the big boys”.
In 1925, Geologist E.J. Wayland documented the existence of Oil seepages in Uganda. It has been in the ground undisturbed all this time until our current President decided our oil was what was going to make us a developed country. From the early 2000’s exploration activities have been taking place and in 2006, there was great celebration when it was announced that there were commercially viable oil reserves in Uganda. Meaning the oil in the ground is enough in quantity and quality. From that time, there has been a lot of activity including new laws, policy and institutional framework being rolled out, Production Sharing Agreements being signed and licenses awarded to companies. The deadlines kept shifting. At some point we had been assured that oil would be flowing in 2016 then 2020 and then we lost track.
It has not been easy. President Museveni had previously insisted that oil was going to be refined in Uganda so that Uganda can benefit more. He did not want a repeat of our coffee story, we sell coffee beans so cheaply and buy back “Nescafe” so expensively. Unfortunately, after lengthy negotiations, the government had to change its strong stance. In 2013, The Government compromised with the oil companies and it was agreed that a smaller refinery of 30,000 bbl/day (scalable to 60,000 bbl/day) to serve the domestic market would be constructed and a pipeline to export crude oil be put in place.
So much has been going on behind the scenes and it is now time to put the money where the mouth is. It is time to invest in the heavy infrastructure required to get the oil out of the ground. Hence the significance of the Tuesday event; when all parties confirmed they are onboard and the Final Investment Decision to invest in the oil industry in Uganda was made. There is no turning back now. The FID kickstarts the development phases intended to last 3-4 years during which time more than USD15 Billion is to be invested in facilities and services necessary for production. More than 40% of that will be spent locally translating into unprecedented business and employment opportunities for many sectors in Uganda.
So, for the typical Ugandan business person who has been sitting on the fence, it is time for action. The companies engaged in the sector like Total Energies and CNOOC are not jokers. We are not dealing with the likes and scale of Mike Ezra, Akon City or Aim Global. These are the real “big boys”.
We invite you to join the party and ensure that development does not pass you by. We are not saying that you move your family to Buliisa tomorrow, however you need to start by making your business look attractive. In the local colloquial language, “wetege!”.
Make sure your business attains a formal structure; Register it as a legal entity whether company, partnership etc. Get the required approvals and licenses for your industry. You should be a business that can issue receipts and invoices, not these brief case businesses. Additionally, the local business must have some demonstrable capacity to add value to meet the required health, safety and environmental standards. You might have to consider strategic partnerships or entering a joint venture with a similar company so that you get capacity to serve and meet standards. Thereafter register on the National Supplier Database of the Petroleum Authority of Uganda (PAU), which is the regulator of the oil and gas industry. Registration is free and fairly simple on the PAU website.
The Oil activities will not operate in a vacuum by themselves. The employers will need office supplies, HR management consultancy, legal services to mention but a few. Their employees will need food, to dry clean their clothes, to sleep somewhere, to relax and enjoy themselves, you get the picture.
Thankfully our law and policy makers have earmarked certain goods, services and percentages to be exclusively provided/filled by Ugandan employees and Ugandan companies. In various steps and activities, different levels of Ugandan participation is required. There are extensive guidelines to promote local content in Uganda where the companies in the oil sector are required to use and prioritize Ugandan local expertise, goods and services.
So, this will all not be in vain, get your act together and get onboard right now!
FOR MORE ON THIS PUBLICATION:
Claire Amanya Rukundo-Kakeeto
Claire is the Founder & Managing Partner of CR Amanya Advocates & Solicitors. She is a Rotarian, a UK trained lawyer, Advocate, a Commissioner of Oaths, a Notary Public, Insolvency Practitioner and a Certified Chartered Secretary with over twelve years’ experience in legal practice. Claire has previously acted as counsel and relationship manager to a number of leading multi-national companies operating and/or engaged in transactions in Africa.
Email: claire.amanya@cramanya.com Phone: +256772484003
Frank Rovin Wadidi
Frank is a Lawyer working with CR. Amanya Advocates & Solicitors. He holds a Bachelor of Laws Degree from Makerere University, Kampala, and is currently a candidate for the Postgraduate Diploma in Legal Practice of the Law Development Centre. Frank joined the firm in November 2021, and his work at the Firm spans across the Litigation & the Corporate & Commercial Departments.
Email: frank.wadidi@cramanya.com Phone: +256705444656
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