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(MONITOR - UGANDA) Where are Ugandans in lucrative oil deals?

Where are Ugandans in lucrative oil deals?
By Chris Obore
Posted Saturday, December 18 2010 at 00:00

OILY BUSINESS: Nema officials inspect a Tullow Oil rig in Hoima. Even the most basic services in the oil mining business are being provided by foreigners. PHOTO BY CAESAR ABANGIRAH

Ever since oil deposits were discovered in Uganda a mixed buzz of excitement and anxiety has captivated the country. The expected petrodollars have brought new hope for millions of locals who now dream of tapping fortunes from the oil wells. But as Chris Obore finds out, these might only be daydreams:

The wish of locally owned companies to cash in the fledgling oil industry could turn out to be fantasy after it emerged that lucrative deals are going to foreign owned firms.

A senior government minister, however, said the hand-out of lucrative contracts to foreign firms could have been loaded with corruption while Energy ministry permanent secretary, Kabagambe Kaliisa said “Ugandans were sleepy for a long time.”
And Tullow Oil says “we are right at the forefront of promoting local content.”

The National Oil and Gas policy requires that local firms are given priority in the provision of services to the oil and gas exploration exercise. However, our investigations reveal that some foreigners have formed a chain of firms that are ‘winning’ to provide even the most basic services that ideally can be handled by Ugandans.

These services include provision of parking yards, warehousing, catering and supply of equipment among others. These are being provided by three different firms, ironically owned by the same foreign directors. The firms are BMS Minerals Ltd, East African Cranes Ltd and Strategic Logistics all owned by Gerry Burley, John William Paul Sherwen, Mark John Morley and Peter James Bateman.

According to Mr Kabagambe, although the policy requires local content in the oil and gas service sector, it may be not be possible to get locals ready to offer the services.

“Ugandans didn’t know what was going on because they were sleepy for a long time,” he said.

Sector veteran

Mr Kabagambe is part of a handful of Ugandans who are veterans of the local oil sector. Asked whether locals couldnt provide parking yards, Mr Kabagambe said, “I know what I am saying because I have been in the oil sector for a long time. Those companies need time to develop,” he added.

However, sources familiar with the industry, said confidentially that the foreign owned-firms benefited from insider information provided to them by senior managers in Tullow, one of the companies exploring for oil in the country.

Tullow Country chairman Elly Karuhanga dismissed the claim: “The CEO and entire management of Tullow have been instructed to ensure that Uganda and Ghana become a case study for indigenisation and empowerment of local content so that local people get integrated into oil business.”

Mr Karuhanga also said the oil firm has been trying to involve many Ugandan companies “but there has been a lull in activities of Tullow because of unsigned agreements with government.”

He said some foreign firms got the deals because the government gave Tullow certain deadlines to meet or relinquish the oil blocks; therefore the firm had a dilemma to finish the job as fast as possible and also ensure that Ugandans get business.

Still, Mr Karuhanga acknowledges that there is an anomaly but that will be rectified in January when the company expects to meet both local and international firms to discuss business prospects.

Work with locals

“I am quite happy with what is going on and with what is afoot. But those companies will be urged to work with Ugandans; that is the policy Tullow will adopt.”

While Tullow reveals progress, our investigation found out that lack of transparency could foment unrealistic expectations thus inspire resentment.

Although under his docket, Energy minister Hillary Onek blames the anomaly on his bureaucrats. “Let Parliament put public servants in the dock because we need local participation,” he said, adding that the bureaucrats don’t want politicians to dig into what is happening.

“Why should contracts go to foreign firms when our civil servants are the ones who licence companies?” the minister asked, adding “slowly, we have to rectify [the situation].”

And in an email response to our queries on how they landed the lucrative contracts, Mr Gerry Burley, a director on various firms offering oil and gas services, said “tender contracts are awarded by the procurement departments and committees of the various Oil Exploration companies.”

He said that only the Energy ministry could explain the official policy regarding the hiring of local suppliers and service providers in the Ugandan oil industry.

“We are fully compliant, tax-paying Ugandan registered companies, and are proud to be contributing positively to the development of Uganda’s nascent oil industry,” he wrote.

Affirmative action

Tullow’s corporate affairs director Jimmy Kiberu said the firm would take affirmative action to promote local service companies, revealing that at least $2.8 million had been spent in training local capacity.

Affirmative action or not, Uganda needs to set specific legislation to operationalise the oil and gas policy which provide the framework of inclusion for locals.

“Before we move to the next stage, there should be legislation on employment and other services in the oil industry otherwise the policy will be abused,” said a key figure in the oil sector. Otherwise, some players such as oil-hungry countries like China – already on the sidelines of oil production in Uganda – could impose their own policies which require that 75 per cent of the workforce be Chinese.

Some oil deposits are also located in national parks especially the two premium ones like Queen Elizabeth and Murchison Falls.

The question therefore is whether the country will chose oil against nature even though observers worry such a choice is likely to swing in favour of oil.

Labels: FUEL, JIMMY KIBERU, OIL, TULLOW OIL, UGANDA

posted by MrK @ 3:27 PM