The role Petroleum Authority of Uganda in facilitating the Oil and Gas Value Chain development.  

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 of crude oil, refining and transmission. Monitoring activities ensure transparency, fairness, and value for money so that the country benefits from sector revenues.

PAU oversees these operations and ensures that they comply with the country's laws and regulations and follow national best practices. For example, in exploration and production, we ensure that resources are used optimally, environmental protection requirements are adhered to and understand how people's livelihoods are affected.  

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

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. PAU and the oil companies have done a lot of work to ensure that both the FID's procurement phase'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 the Ngassa shallow and deep areas by a Nigerian company Oranto Petroleum Limited.  

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

 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. Between 2008 and 2019, the country spent over $ 3.5 billion on supplies provisional services. Out of the $3.5 billion, $1 billion was spent on 1000 SMEs that participated. 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 low hanging fruits. They are spelt out on our website, but I will mention some of them for ease of reference. These include; transportation and civil work, logistics, environmental studies and impact on sustainability, hotel accommodation and catering, security, fuel supply, and others. 

Apart from the ring-fenced sectors, 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 $6 billion available for goods and services supply. 

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

  We have strategies to increase SME participation and these are backed by 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. First, we ensure the visibility of our 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 venturingand sub-contracting among the companies. We are intensifying the utilization of the NSD by transitioning it from just being a register into a joint qualification system for procurement that is transparent. 

Secondly, we understand that SMEs may compete very well technically but lack adequate finances to execute contracts. The government is working to provide a fund where our SMEs can access relatively cheaper funding. The fund is at the stage of drafting the 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) were 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 for free to benefit from the sector opportunities. For further guidance, please visit our website or offices in Entebbe to get support.