Uganda, Tanzania plan private sector led oil and gas summit

Uganda and Tanzania have commenced plans to hold the first-ever private-sector-led oil and gas summit in Dar es Salaam in November, 2021, Uganda’s High Commissioner to Tanzania, Mr Richard Kabonero, has said.

“There have been a lot of meetings on oil between government officials but we need a private sector to private sector meeting between Uganda and Tanzania,” he said.

Mr Kabonero said the oil and gas summit would enable private sector players from both countries to meet, connect and possibly plan joint ventures to exploit opportunities in the 1,445 kilometre East African Crude Oil Pipeline (EACOP) project.

Speaking at a planning meeting with officials from the Ministry of Energy and Private Sector Foundation Uganda (PSFU) at Kampala Serena Hotel yesterday (Wednesday), September 29, the chairman, PSFU, Mr Elly Karuhanga, said the US$3.5 b EACOP which will cross 10 districts of Uganda is the umbilical code linking Uganda and Tanzania.

The EACOP will begin from Hoima, Kikuube, Kakumiro, Kyankwanzi, Gomba, Mubende, Lwengo, Sembabule, Kyotera and Rakai.

The pipeline will be transporting oil from Hoima in western Uganda through to Tanga Port in Tanzania while at the same time moving gas from Tanzania to Uganda.

Mr Karuhanga said both the Tanzanian and Ugandan governments have put in place the much-needed infrastructure and laws to help move the oil sector forward.

He also appealed to petroleum authorities on both sides to set up a local content monitoring unit so that the International Oil Companies do not cheat local companies.

“Contracts worth $50m may scare off a local entity only familiar with $0.5m deals. There is a possibility of a foreign Joint Venture partner cheating a local player by only parting with $5m instead of say $20m. Nigeria lost over $380b in untapped local content after 40 years of oil production without any local players. We need to avoid such a trap,” said Mr Karuhanga.

Executive Director,Petroleum Authority of Uganda, Mr Ernest Rubondo. (Courtesy photo)

The Executive Director of the Petroleum Authority of Uganda (PAU), Mr Ernest Rubondo, said the delays to first oil have “helped put in place strong laws including local content.

He said the oil and gas conference in Dar es Salaam will open the private sector’s eyes to the ever increasing opportunities in the oil sector.

The discovery of 6.5 billion barrels of oil reserves in the Albertine region of Uganda presents an opportunity for Uganda and Tanzania to generate government revenues for domestic investment and catalyze domestic private sector development. Tanzania’s High Commissioner to Uganda, Dr Aziz Ponary Mlima, said he would engage the Tanzania private sector and government institutions to take part in the planned oil and gas conference. 

Small Medium Enterprises (SMEs)

Even before oil production commences and oil revenues start coming in, local enterprises are expected to participate in supplying the industry and start growing their business and the national economy in general.

The Permanent Secretary in the Energy Ministry, Ms Irene Batebe, said the government will continue creating an enabling environment to support the private sector including Small Medium Enterprises (SMEs). 

These are expected to participate in supplying the industry and start growing their business and the national economy in general even before oil production begins and oil revenues start coming in.

Ms Batebe said SMEs are yet to scale up their businesses significantly and or buy specialised equipment to meet the high quality standards needed to participate in such a capital-intensive and quality conscious industry such as oil and gas.

She revealed that government is setting up a fund to support local content

“Sometimes it is difficult to imagine the enormous opportunities that abound. Jobs for the youth aren’t only at the ministry but also are with the private sector. Let’s work together,” said Ms Batebe.

She said the government is setting up a local content fund to support struggling SMEs which may be technically sound but cash-strapped.

Uganda Refinery Holding Company boss, Mr Michael Mugerwa. (Courtesy photo)

The Uganda Refinery Holding Company boss, Mr Michael Mugerwa, said the oil and gas summit in Dar es Salaam will allow private sector to identify opportunities in the development of the oil refinery. 

“There are many opportunities in the industrial park which the government will set up alongside the refinery in Hoima.We need the private sector in the industrial parks. They’re the way to go. We want to develop nitrogen based fertilizer to support our agricultural economy. There are opportunities in value addition such as production of industrial oxygen and hydrogen among others,” said Mr Mugerwa. 

The Uganda Refinery project which includes development of a 211-kilometre petroleum products pipeline from Hoima to North West of Kampala, is estimated at US$ 3 – 4b.

The industrial park will have an international airport, refinery, crude oil and products storage, transmission hub, logistics warehousing and offices.

Total Energies Legal officer on the EACOP project, Ms Samantha Muhwezi, said “these conferences (oil and gas summit) add a positive spin to our efforts to raise funds.” 

Ms Muhwezi said the oil conference is a leap forward in the right direction as the development of the oil pipeline gains momentum.

“It’s good that there is a lot of positivity about the EACOP,” she said.

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