In a move meant to boost the participation of more Ugandans in the oil and gas sector, government has set stringent rules on hiring expatriates.
Dozith Abeinomugisha, an assistant commissioner in the petroleum directorate in the ministry of Energy and Mineral Development, says the rules are meant to regulate expatriates in the sector. Abeinomugisha was on Wednesday presenting a paper on the progress of oil and gas sector to The Observer staff. The African Centre for Media Excellence organised the presentation.
The new rules, Abeinomugisha explained, restrict international oil companies (IOCs) from bringing into the country expatriates to occupy positions that qualified Ugandans can do. The rules also apply to all companies that seek to participate in the oil industry.
“We have coordinated with the ministry of Internal Affairs to ensure that no expatriate will get a work permit unless he or she has a recommendation from the Permanent Secretary in the ministry of Energy and Mineral Development,” he explained. He emphasised that the recommendation will be personally signed by the permanent secretary.
Abeinomugisha said that before an expatriate is issued with a work permit, any firm seeking to bring in an expatriate will have to advertise the job and seek out local workers first.
In case there is no Ugandan qualified for the job, the permanent secretary will then allow the ministry of Internal Affairs to issue a work permit to an expatriate for a specific time frame. He said after hiring an expatriate, an oil company will be required to train Ugandans such that by the time the work permit expires, there are Ugandans qualified to take up the job. In addition, they will require the companies to submit a nationalisation plan to the petroleum authority.
A nationalisation plan is a plan that details how Ugandans will gradually manage the sector by taking strategic positions in the oil companies. Oil companies are also expected to submit procurement plans for goods and services as well as jobs annually at the beginning of the year.
“An expatriate’s work permit will not be renewed. It is a policy we need to pursue,” Abeinomugisha said.
The issue of expatriates is a concern in Uganda’s oil industry because of the hefty pay that foreigners earn compared to their local counterparts. In 2013, the Daily Monitor newspaper ran a story about how Tullow Oil Uganda paid a one-man consultancy firm, South African-based Kevin Consult, a staggering $3,500, approximately Shs 12 million at the current exchange rate, daily for one year to teach its officials about “organisational effectiveness.”
The story also noted that Tullow paid another foreign consultancy firm, Montrose Associates, $769 million to evaluate its corporate social responsibility in Uganda. Some industry players say there are Ugandans or Ugandan firms that could have done similar work if the contracts had been advertised. However, Tullow defended the payment, arguing the cost was born by Tullow group and therefore not recoverable.
The Petroleum (Exploration, Production and Development), Act 2013 provides that a licensee should within one year after the grant of a license, or every after one year, submit to the authority for the approval of the detailed programme for recruitment and training of Ugandans.
So far, the directorate of petroleum has established the National Content section, headed by Betty Namubiru, while the national oil companies also recruited national content managers to ensure strict compliance with the national content provisions in the act.
Abeinomugisha explained that the petroleum industry is going to create thousands of jobs but implored Ugandans to train and acquire the relevant certifications to be able to get the jobs.
Last year, the joint venture oil companies released the Industry Baseline Survey Report, which showed that at peak, the oil industry will employ 11,000 and 15,000 people directly, while induced jobs will range between 100,000- 150,000 indirect jobs.
The report notes that out of the above jobs, technicians and craftsmen will contribute more than 60 per cent, while engineers and managers will account for only 15 per cent and the rest shall be either semi-skilled or casual workers.
Abeinomugisha said that he got surprised when people paid a lot of attention on such issues as the sharing of royalties, arguing that the money there was small. Instead, he encouraged Ugandans to focus their energy on how to take up the available jobs in the industry.
He said during the exploring phase, many of the staff that drove the cranes were Kenyan because there were no certified crane drivers in Uganda. This is partly because Kenya has a school for certification of crane drivers, while Uganda doesn’t.
“Ugandans are not going to Kenya for training and certifications. We expect the ministry of education to start a certifying institution here,” he said. Short of that, the jobs will go to expatriates and Uganda will lose money.
Abeinomugisha said government plans to use the associated gas in the Albertine graben to make liquefied petroleum gas (LPG) for cooking, something that could reduce the use of charcoal.
“We will need Ugandans to start using LPG. That will be important because the refinery will also produce LPG,” he said.
He defended government’s decision to build a refinery alongside a crude export pipeline.
“Uganda imports 30,000 barrels of petroleum products a day. This amounts to spending Shs 1 billion dollars annually. This money will be saved in addition to having security of supply. Even then, this is increasing at seven per cent per year. The region consumes 150,000 barrels of petroleum products daily. So, Uganda is also targeting the regional market,” he said.
When production peaks, Uganda is expected to produce 200,000 barrels of oil per day, far more than what the region can consume, hence the need for a crude export pipeline.