The second edition of the #90DaysofOil campaigns run by the Uganda Chamber of Mines and Petroleum (UCMP) came to an end on October 16th with tweeter space hosted by Discourse Africa. The panel of experts including: Ms. Betty Namubiru, Manager of National Content Monitoring at the Petroleum Authority of Uganda (PAU), Mr. Ocitti Bob Felix, Manager of Operations and Compliance (PAU), and Mr. Daniel Muwooya, Manager Commercial at Uganda National Oil Company (UNOC) answered your questions. UCMP gathered questions from the public through its social media.
Does oil exist in Uganda?
Ocitti: Yes. It does because the Albertine Graben was recognized as a source of oil.
What is happening with the community and everything in the oil and gas sector?
Namubiru: There are 16 ringfenced services available for Ugandans, so any Ugandan who can supply can look at these opportunities and see what they can supply. They range from hotel services, ICT, Legal services, stationery provisions, etc… In the law, there is at least a 10% allocation to the procurement process for national participation, as long as a local company can describe how it is going to employ Ugandans, use of local goods and services, and how to build capacity and training. There is also an extra 5% cost implementation action as long as one demonstrates that he has a higher national content. For example, if there are two bidders, one with the lowest price within the range of 5% compared to a second bidder with a 5% higher price, but with a better national content proposal, has an advantage.
Very key also, is the National Supplier Database (NSD). For any company to be able to supply the oil and gas sector, they must be registered on the NSD which is on the website of PAU. The NSD is open all year round. It also supports Joint ventures.
The basic requirements are: Company registration certificate, a tax clearance certificate to demonstrate your compliance with the obligations, a certificate from NSSF, and a letter from the bank to show you hold an account.
Registration on the NSD is not a guarantee to secure a contract but at least promotes visibility and enables participation.
What are the opportunities for people at the grassroots host communities?
Namubiru: There is a lot of emphasis on community-level participation in oil and gas. We see a lot of opportunities to supply foodstuff to the camps. The Tilenga project is going to house 4,000 people, so this is a great opportunity for the people in the Albertine Graben. Transportation, in terms of moving people from the camps to workplaces, is another opportunity, there shall be a need for casual labourers required to support the construction sites. We do encourage all casual labourers to come from Albertine Graben. Participation of the communities is only hampered by capacity.
What are the training opportunities for Ugandans?
The oil companies have been training technicians in the industry. 160,000 are required during peak production, but about 60% of them are going to be technicians. There is a lot of emphasis on training technicians Uganda Petroleum Institute Kigumba (UPIK) is doing work towards skilling. Several private players are also supporting this effort.
What are the environmental aspects of this project?
Ocitti: That has to do with governance of the sector, where we aspire to develop our resources sustainably. Rightly there is a global movement in trying to reduce the carbon footprint, particularly from the fossil fuel industry. We have seen campaigns against EACOP. The argument is that all new fossil fuel projects should not proceed. By deciding to fight EACOP, they are indirectly fighting the upstream sector of oil development in Uganda. As a country, that will be the most strategic decision taken. We have the National Determined Contributions that we submit to the UN panel on Climate Change. We are going to COP27 in Egypt in November and we shall be presenting our strategies to reduce carbon emissions. These include: planting more trees and minimizing emissions by use of LGP for cooking, but that does not mean that you stop a development project like Uganda’s.
Why has the development of our oil taken too long?
Ocitti: We were looking at developing the capacities of Ugandans in terms of skills, This was a relatively new project and we did not have enough qualified personnel. The country needed to first get the personnel that is skillful, with the capacity to negotiate contracts which we did well in many accounts of the contracts that we have in the country. We needed some people to go and study abroad so that they could get the hands-on experience we needed. This is because the companies are in a much better position to negotiate than us because of our lack of experience. To a great extent, the government has done well.
We needed to understand the dynamics of the refinery, pipeline, and production which is why we needed to optimize our understanding of the field so we can understand better development schemes.
Institutional arrangement – when the oil was discovered, the laws we had were very old, we needed to develop laws that spoke to the reality of the time. We are in the process of reviewing and updating the oil and gas policy (Petroleum policy) which is supposed to speak to the realities of the issues of the environment, and how do we balance to ensure that the project is working intendment with the aspirations of the rest of the world, without losing sight of our particular challenges.
What is the level of transparency regarding oil agreements?
Ociiti- The law requires that you write to PAU to access the information. We have signed up for EITI in August 2020, so we have to declare all contracts that we sign. When you start as a new member to EITI, it does not put an obligation on you to declare contracts signed before you become a bonafide member.
Why a pipeline and why was the route chosen?
Muwooya: Cost efficient. The most cost effective route is Hoima -Tanga. There were also environmental considerations we, made avoidance to reduce footprint on the people, cultural heritages and environment. Also Northern Tanzania had very good coverage of roads compared to Kenya.
Why pipeline and other forms of transport?
Pipelines are the most efficient mode of transporting liquid commodities. The cost of using road would have been higher. The pipeline will be entirely buried over the 1,443 km stretch. We are going to use 30 meters corridor for only six month at maximum, after that people and animals will continue to use the land. Railway has to be on the surface moving everyday exposing people and animals to accidents.
What happens in the event of an oil spill and what are doing to make sure that doesn’t happen?
Contingency planning takes into consideration avoidance and mitigation- reducing impacts if it happens. The pipeline will have insulation that will also be used to keep temperatures high .There the is a high density polythene casing technology design that makes the risk of spilling limited. Leak detection will be be highly monitored. The system is supported by fibre optic cable, running along the pipeline and supports real time communications.
How does the pipeline route affect biodiversity?
The purpose of the route was to avoid environmentally sensitive ecosystems. The EACOP crosses two major rivers, but we shall use horizontal directional drilling under the river such that it will never affect flow or content. It is avoiding Lake Victoria and, major national parks in Tanzania.
Are Project Affected People (PAPs) going to be rendered homeless?
Muwooya: On PAPs, there are 3 things. There are those chosen to be compensated in cash, they got more than what their assets were worth. We trained them in financial literacy and livelihood programmes. There are 34 families who received replacement houses built by the project. Others chose to build for themselves, so we monitored the quality. The PAPs are not complaining, those complaining are those who have no closeness to the project. There will be no single replacement house on top of the pipeline. New houses are being constructed in different locations within the same villages.
Last words, where do you see the project in view of opposition?
Muwooya: The project gives the opportunity to unlock our resources and gives good revenues. Regardless of our political persuasions, we agree that our main challenges of resource envelop are limited and anything that expands it is a good thing.
Ocitti: Our project is the most thought through. The delay was a blessing in disguise. We have developed capacity, skills, and legislation.
Namubiru: We are past speculation time, we have looked at the contracts for EACOP and there are many in the logistics, telecommunications, etc, there are a lot of commitments for national content and hence the projects are going ahead. We need to build partnerships with experienced companies, and upgrade our skills, and meet standards.