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World Bank Document Report No: ACS12528 . Public Disclosure Authorized Republic of Uganda Leveraging Oil and Gas Industry for the Development of a Competitive Private Sector in Uganda Public Disclosure Authorized . March 25, 2015 . Public Disclosure Authorized GTCDR AFRICA . Public Disclosure Authorized 1 Standard Disclaimer: This volume is a product of the staff of the International Bank for Reconstruction and Development/ The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Copyright Statement: The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/ The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978-750-4470, http://www.copyright.com/. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail [email protected]. 2 ACKNOWLEDGEMENTS The study was undertaken by an international team led by Ms. Valeriya Goffe (Finance and Private Sector Development Specialist, World Bank). The team included Mr. Andrea Dall’Olio (Lead Economist, World Bank), Ms. Silvana Tordo (Lead Energy Economist, World Bank), Ms. Hannah Messerli (Senior Private Sector Development Specialist, World Bank), Mr. Moses Kibirige (Senior Private Sector Development Specialist, World Bank), Ms. Jiazhen Zhou (Junior Professional Associate, World Bank), Ms. Celia Namyalo (Program Analyst, World Bank), Ms. Monica Rivero (Program Assistant, World Bank) and Mr. Amos Bakeine (Consultant, World Bank). This report captures the valuable comments and suggestions of peer reviewers Gosia Nowakowska-Miller (Operations Officer, IFC), Simon Jones (Vice President, Solimar International), Sebastian Saez (Senior Trade Economist, World Bank), Roberto Portugal (Senior Trade Economist, World Bank) and Martin Molinuevo (Consultant, World Bank). The team expresses sincere gratitude to the officials from the Petroleum Exploration and Production Department (PEPD) of the Ministry of Energy and Mineral Development (MEMD) and Ministry of Tourism, Wildlife and Antiquities (MoTWA) for the excellent collaboration during the missions. We are also grateful for the support from various people from different organizations, including government agencies promoting national content in the oil sector, International Oil Companies (IOCs), regulatory authorities, financial institutions, private enterprises, and international donors the team met during the missions. 3 Table of Contents ACKNOWLEDGEMENTS ....................................................................................................................... 3 ABBREVIATIONS AND ACRONYMS ................................................................................................... 6 EXECUTIVE SUMMARY ........................................................................................................................ 8 INTRODUCTION ..................................................................................................................................... 15 1.1. PURPOSE AND OBJECTIVES ......................................................................................................... 15 1.2. METHODOLOGY .......................................................................................................................... 17 CHAPTER 1. LOCAL CONTENT POLICIES IN THE OIL AND GAS SECTOR .......................... 18 1.1. INTRODUCTION ............................................................................................................................ 18 1.2. OIL AND GAS VALUE CHAIN ....................................................................................................... 19 1.3. OVERVIEW OF LOCAL CONTENT POLICIES IN THE WORLD......................................................... 22 1.4. OBSERVATIONS AND RECOMMENDATIONS ................................................................................. 39 CHAPTER 2. NATIONAL CONTENT DEVELOPMENT IN UGANDA .......................................... 41 2.1. UGANDA OIL DISCOVERY CONTEXT........................................................................................... 41 2.2 OVERVIEW OF PETROLEUM LEGISLATION IN UGANDA .............................................................. 46 2.3 ASSESSMENT OF BINDING CONSTRAINTS FACED BY LOCAL SUPPLIERS OF THE OIL INDUSTRY IN UGANDA .................................................................................................................................................. 50 2.4 DETAILED ANALYSIS OF NATIONAL CONTENT SUPPORT INITIATIVES IN UGANDA ................... 61 2.5 OBSERVATIONS AND RECOMMENDATIONS ................................................................................. 69 CHAPTER 3. VALUE CHAIN ANALYSIS OF AGRICULTURE AND FISHERIES ..................... 74 3.1 CURRENT STATE OF THE AGRICULTURE SECTOR IN UGANDA .................................................... 74 3.2 CURRENT STATE OF THE AGRICULTURE SECTOR IN THE ALBERTINE REGION ............................ 80 3.3 PROSPECTS OF SUPPLYING FOOD TO THE OIL CAMPS BY THE ALBERTINE REGION ..................... 87 3.4 OBSERVATIONS AND RECOMMENDATIONS ................................................................................. 96 CHAPTER 4. OIL AND TOURISM- CO-EXISTENCE OF THE TWO KEY DRIVERS OF UGANDA’S ECONOMY ......................................................................................................................... 99 4.1. UGANDA TOURISM IN CONTEXT ................................................................................................. 99 4.2. THE IMPACT OF OIL EXTRACTION ON TOURISM ....................................................................... 102 4.3. MFNP SURVEY - RESULTS AND FINDINGS ............................................................................... 107 4.4. OBSERVATIONS AND RECOMMENDATIONS ............................................................................... 112 CONCLUSIONS AND RECOMMENDATIONS ................................................................................ 117 ANNEX 1: ACTIVITIES AT EACH STAGE OF OIL & GAS VALUE CHAIN - GOODS & SERVICES .............................................................................................................................................. 124 4 ANNEX 2: STATUS OF LICENSING IN THE ALBERTINE GRABEN OF UGANDA ............... 126 ANNEX 3. LOCAL CONTENT OBJECTIVES OF THE NATIONAL OIL AND GAS POLICY 127 ANNEX 4. ANALYSIS OF ENTERPRISE DEVELOPMENT CENTERS IN SELECT COUNTRIES ........................................................................................................................................... 129 ANNEX 5. IOC BASELINE SURVEY ................................................................................................. 137 ANNEX 6. ROUNDTABLE DINNERS ON NATIONAL CONTENT – CROSS-COUNTRY LESSONS ................................................................................................................................................ 142 ANNEX 7. SIMPLIED STRUCTURES OF SELECT VALUE CHAINS IN THE ALBERTINE REGION .................................................................................................................................................. 145 ANNEX 8. APPROACHES TO MAXIMIZE THE PARTICIPATION OF THE ALBERTINE REGION IN SUPPLYING FOOD TO OIL CAMPS .......................................................................... 147 ANNEX 9. PROJECTED WEEKLY FOOD REQUIREMENTS FOR THE OIL CAMPS DURING THE PERIOD 2015-2019 ....................................................................................................................... 158 ANNEX 10. NATIONAL PARKS IN UGANDA AND TOURISM OFFERINGS ........................... 159 ANNEX 11. CASE STUDIES OF NATURAL RESOURCES EXPLORATION IN NATURE RESERVES AND PROTECTED AREAS ........................................................................................... 163 ANNEX 12. SURVEY INSTRUMENT FOR TOURISTS .................................................................. 170 ANNEX 13. SURVEY INSTRUMENT FOR GUIDES AND RANGERS ......................................... 173 ANNEX 14. SURVEY INSTRUMENT FOR TOUR OPERATORS ................................................. 175 ANNEX 15. SURVEY METHODOLOGY AND LIMITATIONS ..................................................... 177 ANNEX 16. LIST OF REFERENCES .................................................................................................. 178 ANNEX 17. LIST OF KEY INFORMANTS MET DURING THE MISSIONS ............................... 186 5 ABBREVIATIONS AND ACRONYMS AP Aquaculture Parks BDS Business Development Services BNDES
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