Business

Take Standards Seriously Or Risk Losing Out On Oil Opportunities; Engineers Warned

Mr. Robert Kasande, the Permanent Secretary of the Ministry of Energy and Mineral Development has advised local Engineering and construction companies to comply with the required standards or risk missing out on the opportunities once the Oil and Gas Final Investment Decision (FID) is taken.

Kasande said that while other sectors may bend some rules to accommodate and promote local content, the oil sector is different as it follows strict international standards that have to be followed to the dot

He was speaking last Friday to hundreds of engineers and building contractors that were attending oil and gas conference at the Mistil Hotel in Kampala held under the theme “Enhancing participation of national entities in high-value Engineering and Construction contracts in Uganda’s oil and gas sector”.

The conference, organised by the Petroleum Authority of Uganda (PAU) in partnership with other government agencies, 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.

“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,” Kasande said while closing the conference

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.

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“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,” he noted.

The keynote speaker of the day was Mr. Andrew Kasekende, 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 are lack 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.

Financing

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

Mr. Brian Tahinduka, the Sector Head for Energy and Infrastructure at Stanbic Bank Uganda Limited revealed that Stanbic Bank was ready to fund up to 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.

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