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Engineering and construction sector players tipped on oil and gas opportunities

Mr Rubondo, the ED Petroleum Authority of Uganda [centre] at the Launch of NOGTR. (PHOTO/David Mafabi)

KAMPALA – The Minister for Works and Transport,  Monica Azuba Ntege has on July 23, said that while a number of reforms have been made in the construction sector, lack of knowledge about opportunities in the oil and gas sector still remain.

While speaking at a conference,  organised by the Petroleum Authority of Uganda (PAU) in partnership with other government agencies, Hon Azuba tipped the engineering community and their professionals   how best to harness the linkages and opportunities in Uganda’s Oil and Gas Sector.

She explained that engineers should be prepared to tap into the upcoming construction phase by the International Oil Companies (IOCs).

The conference was part of the efforts to prepare local firms for the development phase of the oil and gas sector with planned construction of the East African Crude Oil Pipeline (EACOP) and the Oil refinery, among others.

While officially opening the conference under the theme “Enhancing participation of national entities in high-value Engineering and Construction contracts in Uganda’s oil and gas sector”, Hon Azuba said the construction phase in the oil and gas sector provides opportunities for Uganda Construction and Engineering firms and individuals to provide the related services and supplies.

“I have been briefed that the Oil and Gas Sector is expected to generate $15-20 billion investment in the next three years in various projects that will lead to First Oil. Government has put in place an enabling legal framework for the participation of Ugandans in these activities, and for your information, civil works and provision of available construction materials are ring fenced for Ugandans,” she said.

The Minister further encouraged the professionals, contractors, manufactures and suppliers with the necessary competencies and capacity to extend their sphere of influence and explore these opportunities.

Mr. Ernest Rubondo, the Executive Director of the PAU said experience from oil-producing countries across the world showed that for the oil and gas sector to spur inclusive growth, deliberate efforts have to be made to enable the benefits from the sector reach the wider population. This, he said, would only primarily be achieved through growing the participation of Ugandans and Ugandan entities in the provision of goods and services to the sector.

“The construction and engineering subsector of the economy is one of the areas which has a very significant potential to benefit from the development of the country’s oil and gas sector.  This is especially so because the construction and engineering subsector provides opportunities for high-value participation of Uganda entities,” he said.

Mr. Rubondo added that potential local suppliers will be empowered with knowledge on the construction and engineering requirements for the oil and gas sector in terms of quantities, scope, timelines and standards.

“The PAU is looking forward to the development of the oil and gas sector in a way that will enable the sector to contribute to Uganda’s socio-economic transformation. Achievement of this goal requires decisiveness, adequate preparation and implementation of a road map that positions the sector players to reap the benefits,” henoted.

Mr. Rober Kasande, the Permanent Secretary of the Ministry of Energy and Mineral Development in his closing remarks said the local companies need to comply with the required standards or risk missing out on the opportunities once the Final Investment Decision (FID) is taken.

“FID will surely be taken. It may be tomorrow or the other day but whatever time it comes, we should prepare and ensure that whatever you take from here, you put into practice. That way, when time for bidding comes, you are ready to participate,”he said.

The keynote speaker of the day was Mr.AndrewKasekende,a Director at ICS Engineering and Environment Limited, which is working with UK-based Worley on the Resettlement Action Plan (RAP) for the EACOP. Mr. Kasekende revealed that several challenges hinder local companies from getting contracts in the oil and gas sector.

“From experience, the major challenges faced by local companies arelack of awareness of oil and gas standards, high cost of capital, and business uncertainty after investment,” he said.

Mr. Kasekende further offered lessons learnt like the need to have contracts sized appropriately to meet capacity and financial capability, support to smaller subcontractors to meet quality and HSE standards, and sub-contracting of smaller Albertine Basin companies to maximise Ugandan employment.

In their submissions, the IOCs said many opportunities exist for the local firms but failure to submit proper tender and bid documents had left them out of mega contracts offered.

While presenting on the procurement strategy for the upcoming Engineering, Procurement and Construction (EPC) phase, Mr. Mathew Kyaligonza from CNOOC Uganda Limited offered free advice on how to have a successful bid.

“If you want to have a successful bid,do not submit generic tender responses; match responses to questions asked, separate proposals, especially Price from Un-priced Commercial Proposal, complete the bid proposal and submit on time,” he advised.

Mr. Ernest Rubondo, the ED PAU speaking to journalists at the event. (PHOTO/MAFABI)

Financing

The Financial entities present promised the local Ugandan companies financing options that would lead to a mutual benefit to both parties.

Mr.BrianTahinduka, the Sector Head for Energy and Infrastructure at Stanbic Bank Uganda Limited revealed that Stanbic Bank was ready to fund upto US$ 54 million for a single project.

“As long as you have the capacity and capability, we have the money. We are the only institution with a unique triple A rated Mark in Africa for such huge projects,”he said.

The bank is also currently undertaking capacity building for Small and Medium Enterprises (SMEs) under their incubator programme to prepare them for the opportunities in the oil and gas sector.

The PAU allayed the fears of local engineering and construction companies regarding bundled contracts. Ms. Peninah Aheebwa, the PAU Director, Technical Support Services outlined the law.

“Regulation 10 subsection 3 of the Petroleum National Content Regulations states that every licensee, operator, contractor and subcontractor shall provide additional and timely information and reduce the size and complexity of the scope of works by unbundling of contracts and formulate work packages which are affordable by Ugandan companies, Ugandan citizens and registered entities,” she quoted.

Ms. Aheebwa also emphasised the need for companies to register on the National Supplier Database, which is mandatory for companies that would like to supply goods and services in the oil and gas industry.

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