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How Much Will Ugandans Earn from $20B Oil Projects

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How Much Will Ugandans Earn from $20B Oil Projects 20 NEW VISION, Tuesday, December 10, 2019 OIL & GAS NEW VISION, Tuesday, December 10, 2019 37 How much will Ugandans earn from $2ob oil projects? By Pascal Kwesiga benefits sharing,” Bategeka said. The legislator, however, said there would atrick Mugisa (not real names) be several avenues through which Ugandans leaves home before 5:00am “Ugandans need could tap into the petrodollars, for instance, to catch a bus from Hoima through supply of goods and services. town to Nyamasoga village to be sensitised He noted that Uganda has not attained the in Kabaale parish every day. required capacity and numbers required by the The bus, belonging to the oil industry, although more welders are being company building Uganda’s to be able to churned out by the Uganda Petroleum Institute P second international airport in Kigumba and other institutions under the in Hoima, sets off at 6:10am and arrives at the understand the international accreditation arrangement. construction site within 40 minutes. “It is true that technical jobs will be for Mugisa is part of the local casual labourforce existing local foreigners. I do not know if we have a Ugandan the company ferries from Hoima to the project with requisite capacity to be a project manager site daily. The bus takes the workers back to content legal for the construction of an international airport Hoima town after work at 7:30pm. Mugisa built by an international company,” Bategeka operates an excavator at the quarrying site, framework so noted. earning about sh400,000 monthly. The local content policy for oil and gas There are nearly 1,000 Ugandans working they do not requires that 40% of the contracts be awarded on the project, most of them in low grade jobs to Ugandans. The China Railway No.5, which is such as drivers, foremen, surveyors, mechanics sign contracts upgrading the Bulima-Kabwooya section of the and lab technicians. The highest positions held Kigumba-Kyenjojo road, one of the oil roads, by Ugandans on the projects are sanitation, which could hired 19 acres of land from a family in Kihooko administrative and environmental officers, village, Buhimba sub-county in Kikuube according to our investigation. deprive them of district, at sh65m. The sh65m payment the Yet there are only about 20 expatriates family received for 19 acres translates into taking home between $10,000 and $30,000 opportunities.” sh1.15m for each acre (according to the local in monthly earnings. This means seven land rent rates) for three years if the value of expatriates earning, for instance, $15,000 each the rock is not factored in. (about sh55m) take home sh385m in monthly Works and transport minister “I think the company is renting our land earnings. This is nearly equivalent to salaries Monica Ntege cheaply and then taking out the aggregate of 1,000 Ugandans, with each taking home free of charge,” Thomas Kato, a member of the sh400,000. A substantial number of local family, said. workers on the project earn sh400,000 per The China Communication Construction month. Company, which is building the Hoima- “We work for more than 12 hours a day and aggregate needed is likely to be generated from Kakumiro-Kagadi road, paid sh50m to Joseph that is what we earn. And that money also Muhanika’s land. Birungi for leasing his estimated 10 acres of covers lunch and accommodation in Hoima If Muhanika had been allowed to sell each land to crush rocks. The land is located in The 92km Hoima-Kaiso-Tonya road. Ugandans that have been cotracted to work on such projects earn peanuts compared to their foreign counterparts town,” a worker said. tonne of crushed stones to the contractor (with Mugarama village, Buyanja county in Kibaale The investigation findings raise questions contractor meeting the cost of crushing the district. The company also leased about five on how much Ugandans would earn from the rock) for just $1 (about sh3,700), he would earn acres from Godfrey Sunday in Kisojo village, development phase of the oil industry; through over sh3.3b from just 900,000 tonnes. Then, if a Bugangaizi West in Kibaale district, for direct employment and supply of goods and 20 expatriates Ugandan contractor had been allowed to break sh63.9m. services. It is estimated that between $15b and the rock to the required standards and sell each “The stones they have taken out can build $20b will be spent during the development Each takes home between $10,000 Local content bonus: Experts disagree tonne of aggregate to SBC for only $5, he would several kilometres of roads. But what did I get phase of the oil industry. and $30,000 in monthly earnings. This earn over sh16.6b from 900,000 tonnes. for my land and the rock? It seems they only The money is expected to be spent on means seven expatriates earning, for The vice-chairperson of the Association of Uganda the health and safety environment and get into joint really earned 28% of the money spent by oil firms That would translate into over sh33b leased my land without the rock, which is the development of wells for oil production, infield instance, $15,000 each (over sh55m) Oil and Gas Service Providers, Denis Kamurasi, said ventures,” he said. during the first exploration round. if each tonne is sold at $10 by the local most important,” Sunday explains. pipelines, central processing facilities, water take home sh385m in monthly earnings. Ugandans could retain a substantial part of the oil Kasande said Ugandans with relevant capacity are Even when the local content law is in place, Ggoobi contractor. The Chinese contractors such While the companies indicated that purchase abstraction and injection plants, the refinery This is nearly equivalent to salaries of money through employment and contracts on upstream free to compete for contracts beyond ring-fenced goods noted, it may not be implemented because of the as China Communications Construction of stones from the local market would constitute and Uganda-Tanzania oil pipeline. Part of that 1,000 Ugandans, with each taking home petroleum projects. and services. “unwillingness” and vulnerability of Ugandan law Company (CCCC), which is building the between 20% and 30% of the value of the money is already being spent on building 10 oil sh400,000. “We are going to have 70% of the employees on “They can build well pads, roads in the camps and enforcers to compromise. Hoima-Kakumiro-Kagadi road, sells a tonne contracts, it could actually be 5%, according to roads and Hoima International Airport. these projects being Ugandans,” he added. Kamurasi facilities to extract water from the lake. We are now A legal expert, who asked to remain anonymous, said of aggregate to the Ugandan sub-contractors some industry analysts. The energy ministry officials have severally explained that sub-contractors with the highest local going to drill 500 wells, but we drilled 100 during the the roads and airport are direct upstream projects working on its projects for $14. The Ugandan The roads authority said earlier that it does said if only 40% of the oil projects money content propositions will get contracts. first exploration round. There is more money,” he said. and are not linked to the oil industry by the petroleum contractors are using the aggregates to build not treat what it describes as the critical oil could be retained in the economy, the country will not be below what it was previously,” he This, he noted, will motivate local and foreign sub- Ramathan Ggoobi, a senior economist, said Uganda laws. “That was an oversight on our part, but I think concrete structures on the same oil roads. roads differently from other (roads) in the would not remain the same. Their assessment added. contractors to expand local content benefits. The has trained people in areas which are not required by direct petroleum projects would not suffer from similar In order to appreciate what informed the transport network under its control. is based on the estimated 28% of the money, companies with the highest local content propositions the industry. challenges. Expatriates have to be paid well because decision of the main contractors to hire foreign “We call them critical oil roads because the which is said to have been earned by Ugandan Glaring contradictions will be established by evaluating their technical and Ggoobi added that the ones who have received they have trained for a long time to get the experience sub-contractors, some linked to (contractors), Government set a target to start oil production,” suppliers of goods and services during the first However, Karuhanga observed that having a financial proposals. “Contractors with the highest local training in fields required by the industry do not have they have and some have relocated families to work it is important to look at the sources of the the authority’s media relations manager, Allan exploration round. The oil companies said large local labourforce on a project does not content propositions have a 10% bonus. This means the requisite experience. here,” he added. However, the SBC spokesperson, loans being used to build the oil facilities. First Ssempebwa, said. they spent over $3b during that phase. The translate into increased local content benefits. they would be given free points and that would make “They have trained legal, monitoring and evaluation, Amos Muriisa, denied the findings. “Have you seen our of all, the works and transport ministry and The works and transport minister, Monica Ugandans reportedly earned the 28% thorough This reflects the picture at the airport project. them more competitive and then get the contract,” as well as human resource managers.
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