Uganda’s nascent oil sector needs serious people

September 8, 2017 in Business, Energy, Investment by Editor

September 8— Elly Karuhanga, who chairs the Uganda Chamber of Mines and Petroleum, has advised local businesses looking for opportunities in the oil and gas sector, to keep their eyes on 26 areas ring-fenced for local content including insurance, transportation, cement production, security services, road construction and reinforced steel manufacturing.

Karuhanga was this week speaking at the Standard Chartered Bank (Uganda) second round-table discussion on Public-Private Partnerships (PPPs) for Infrastructure Development in Kampala.

However, Karuhanga, who is also a prominent lawyer, asked that Ugandan business owners to work diligently and professionally with foreigners to build the trust that can translate into successful joint ventures.

Uganda, which has about two billion barrels of recoverable oil and the government wants commercial drilling to start during 2020. But there are still concerns about the Uganda private sector preparedness to reap the benefits from this nascent industry. Karuhanga said the industry needs a “very serious business community” to take advantage of the situation.

“PPPs can offer a solution but due consideration must be given to project selection, transparency, existence of capacity to support process, inefficiencies and clear communication for early stakeholders,” Karuhanga said.

Some of the challenges facing Ugandans include limited capacity to meet scope for refinery, central processing facilities and an export pipeline, but the Tanzanian and Ugandan governments are in the advances to getting the pipeline project underway along with Total, the resource giant.

Limited local financing, high capitulation investment requirements, low levels of technology, long term contracts which require more contracting rigour and inadequate skills relevant to petroleum, also pose a challenge.

Karuhanga said Uganda’s competitiveness at the international level remains wanting and that the country has a poor physical infrastructure coupled with other underlying risks, but the country has a good legal framework.