Monday, October 3, 2016


A few months ago government issued production licenses to two of the three oil explorers paving the way for final preparations for oil production to begin.

Government had already issued a production licence to China’s CNOOC in 2013 who argued they could not do anything major until its partners, UK based Tullow Oil and Frances’ Total got their own licenses.

"It has been reported that up to $20b (sh66trillion) or about the GDP of Uganda will be invested by the time our oil fields reach peak production. Uganda has an estimated 6.5 billion barrels in the ground of which about 1.6 billion barrels are recoverable. At peak production it is expected that Uganda will be pumping out 200,000 barrels a day....

In money terms this could mean Uganda earning as much as 10 percent of GDP in royalties, profit sharing and tax revenues.

That is all very nice but those are official revenues, payments to government. There is the issue not being much discussed, which is the issue of how will Ugandan businessmen benefit from this windfall.

This discussion is going on in backrooms and not in the public space despite its benefits beginning to accrue well before real production begins and long after it stops.

Already we are seeing how it is a real issue with the building of the billion dollar Karuma Dam and the smaller Isimba dam. The contractors on this sites have pointedly ignored local producers of steel, cement and other inputs arguing that they are of inferior quality are not in adequate supply or don’t meet one requirement or another.

As a result manufacturers who had tooled their factories to take advantage of this new construction boom are operating well below capacity, with the excess capacity going begging, aggravated even more by the current economic slowdown.

Like the construction of the two dams, it is important to realise that exploitation of our oil find will continue with or without our input. The companies involved have already committed hundreds of millions of dollars to get this point and you better believe it that they have well laid out plans for every possible contingency including lack of local supplies.

If need be they will import their toothpicks, firewood and even toilet paper if we are not ready.
Speaking to various providers of local content it is clear we are not ready at a policy level or local capacity level and time is running out.

"Take for instance the job sector. It is estimated variously that the oil companies will be employing as many as 15,000 in fields varying from welders, electricians, plumbers and truck drivers. But outside the oil companies many more, in multiples of those hired directly, will be required...

We have a few thousand artisans of various types working in our local industries, doing business or just wandering the streets for lack of opportunity, so the industry will very handily absorb all this slack?

Think again.

According to Patrick Mbonye, founder of human resource consultants Q-Sourcing, the industry will not be hiring any one off the street and will definitely be hiring the graduates of our various vocational institutes.

“There demands are very specific. One needs to have internationally recognised certification to have a chance of working in the industry, first because they want to be sure your skills are up to their requirements and secondly, for their own regulation issues, “he explained.

For instance, in the second instance, to match safety regulations they need to insure the workers but the insurance firms will not insure unqualified people.

Mbonye’s firm The Assessment and Skilling Center (TASC), which is affiliated to several international certification bodies, has done some assessment of some of graduates of a vocational institutes and the results have been dire.

“Our people don’t have the skills required. Period.” He says. “They have done a lot of theory but cannot apply it.”. He warns that by the last quarter of next year, 2017, when actual work will begin, hundreds – he estimates at least 3000 artisanal workers will be needed, of artisans from around the world will be making their way here, taking our bread from under our very noses....

Mbonye says it is not a lost cause yet but time is of the essence, as taking the best of our current crop of workers and raising their skill level will take at least a year.

A disdain for vocational training  means that gaining certification may seem a pricey affair, TASC’s cheapest certifiable course costs $1,400 for a five-week basic electrical installation course by the City & Guilds, the UK based global leader in skills development.

His is one of only two organisations in Uganda that offers this certification – the other is Kinyara Sugar Works.

Maybe we should be content with the anticipated hundreds of millions government will collect in revenues and not try to be too clever and try getting prepared at an individual level for the oil but that will be stupid at best and criminal at worst.

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