Charity Namala: Good Afternoon, Peninah. Could you tell us about yourself and what you do? 

Peninah Aheebwa: Thank you, Charity, for inviting me to this interview.

My name is Peninah Aheebwa. I am the Technical Support Services – Director with the Petroleum Authority of Uganda. I am responsible for ensuring that Ugandans participate in the Oil and Gas sector, the operations are cost efficient and the projects are economically and financially robust.

The  Petroleum Authority of Uganda (PAU) is responsible for monitoring and regulating all operations and activities in the upstream and midstream segments. The upstream refers to exploration, development and production, while the midstream entails bulk transportation and transmission of crude oil, refining and gas conversion. The regulatory focus areas include: Resource Management; Health, Safety, Security, Social & Environment Monitoring; Cost Monitoring;Management of Petroleum Data; National Content; and Stakeholder engagement.

PAU oversees these operations and ensures that they comply with the country’s laws and regulations and follow national best practices ensuring transparency, fairness, and value for money so that the country benefits from sector revenues.

 

Charity Namala: What is the current landscape of Oil and Gas sector in Uganda?

Peninah Aheebwa:  The sector landscape is broad, but there is progress towards achieving the Final Investment Decision (FID).

The FID is the gateway into the construction phase. The PAU and the oil companies have done a lot of work to ensure that both the FID’s technical and commercial requirements are in place. The Tilenga and Kingfisher upstream projects are ready and some of main project contractors, have been identified.

The necessary agreements for the East African Crude Oil Pipeline (EACOP) are in the final stages. The host government agreements have been concluded and the other agreements including the tariff and transportation agreement and the shareholders agreement are close to be concluded. Planning for the refinery which is the second monetization project is also on course.

The sector has other ongoing exploration projects with Armour Energy Limited, an Australian company working in the Kanywataba exploration area and in the Ngassa shallow and deep ply exploration areas by a Nigerian company Oranto Petroleum Limited.

 

Charity Namala: What are the available opportunities for local SMEs in Uganda to participate in the Oil and Gas value chain? 

Peninah Aheebwa:  There are many opportunities for SMEs in the sector.

First, I will mention that we have developed local SMEs’ capacity to undertake contracts of supplying services in the industry. During the exploration phase, between 2008 and 2019, the oil companies spent over $ 3.5 billion. Out of the $3.5 billion, close to $1 billion was spent on 1000 SMEs that participated in the provision of goods and service. As a result, we have seen Ugandan companies moving from providing low-value services to medium and high-value services. We are confident that more SMEs will participate in the next stage.

Opportunities for SMEs are available under the 16 sector categories that have been ring-fenced for Ugandans. SMEs need to focus on these categories because they are the low hanging fruits. They are spelt out on our website, but I will mention some of them for ease of reference. These include; Transportation, Security, Clearing and forwarding, Locally available construction materials, Civil works, Environment studies and impact assessment, Waste management and others.

Apart from the ring-fenced services, there are also opportunities in the highly technical and specialized areas within engineering, procurement and construction. We expect foreigners coming to do that work to enter into joint ventures or subcontract Ugandan SMEs within the specialized areas. It is important to note that all these opportunities will last for a short period of 3 to 5 years. Therefore, the target is to have the SMEs prepared and benefit from the $15 billion expected expenditure on the development phase.

Charity Namala: What can be done to increase the level of SME participation in the Oil and Gas Value Chain? 

Peninah Aheebwa: We have some strategies to increase SME participation and these are backed by the policy and regulatory frameworks.

First, the required policy, institutional and legal framework is in place.

There also national content regulations in the upstream and midstream segments with explicit provisions for participation of Ugandans. In addition to the ring-fenced services, there is a preference for Ugandan goods and services within the regulatory framework plus the mandatory joint ventures. For example, suppose the oil company cannot find the services they are looking for from among Ugandan SMEs. In that case, they can get a foreign company that will need to go into a joint venture with a Ugandan SME.

PAU is also doing a lot to increase SME participation by increasing visibility of Ugandan SMEs’ capacity in the sector through the National Supplier Database (NSD). The industry will not offer contracts to any company unless they are registered on the NSD. In 2017, we started with only 500 SMEs; to date, we have around 1900 companies registered, and of these, 72% are Ugandan. More Ugandan SMEs are being encouraged to register on the NSD.

NSD displays companies’ capacity; this enables us to facilitate joint venturing and sub-contracting among the companies. We are also intensifying the utilization of the NSD by transitioning it from just being a register into a joint qualification system for procurement to increase transparency.

Secondly, we understand that Ugandan SMEs sometimes compete very well technically but fail at financial pricing. The government is working to provide a fund where Ugandan SMEs can access relatively cheaper funding. The fund is at the stage of drafting the relevant statutory instrument by the Ministry of Justice and Constitutional Affairs. We are hopeful this will be finalized within a short time. We are also approaching financial institutions and advising them to provide attractive contract financing for SMEs in the Oil and Gas Value Chain.

Another strategy we are focusing on is the dissemination of information because we know that information is power. Our website has a lot of information on what opportunities are or will soon be available. We have also hosted regional and national conferences to share information with SMEs to prepare to compete favourably. We are working with the oil companies in disseminating this information. It is a regulatory requirement for oil companies to do a supply development workshop every quarter. During the workshops, they provide information about opportunities and standards required.

We are also engaged in SMEs’ capacity building with several partners. Together with the African Development Bank (AfDB) we are implementing a capacity-building project for SMEs to boost business linkages and access market opportunities along the pipeline route. The project will see over 200 SMEs participating in different areas for the next two years. We plan to partner with the Ministry of Energy and Mineral Development to establish industry enhancement centres in Kampala and the project areas. Most of these initiatives aim to help SMEs get ISO certified and increase their ability to access opportunities.

We hope that the above strategies will help increase SMEs participation in the sector. I encourage all SMEs to register on the NSD which is free to benefit from the sector opportunities. For further guidance, please visit our website or offices at Plot 34-36 Lugard Avenue, Entebbe to get support.