Kampala, Uganda | THE INDEPENDENT | Uganda should establish a prudent accounting system if the oil and gas resources are to benefit the country and its citizens. The call for transparency and accountability comes as the Petroleum Authority of Uganda commemorates five years.
The commemoration held virtually on Thursday under the Theme “Creating Lasting Value PAU at Five” had speakers from Ghana and Norway who emphasized the need to equally safeguard the data that has so far been obtained during geological surveys and exploration stages.
Most of Uganda oil and gas laws and policies have been drawn from the Ghanaian and Norwegian experiences.
Director General of the Norwegian Petroleum Directorate, Ingrid Solvberg speaking from Norway praised Uganda for putting in place the required laws and regulations of the oil and gas sector. She however noted that the task of the Petroleum Authority is to ensure that such institutions are respected.
“The Petroleum Authority of Uganda marks five years. And that means you are no longer a newcomer. Today my main message to you is the stress the importance of the authority. Such institutions should play a major role in developing national resources. Now we see the importance of building national capacity” said Solvberg.
In related development, Chief Executive Petroleum Commission of Ghana, Egbert Isaac Faibille, Uganda should adopt policies which will maximize the benefits of the oil and gas for current and future generations. He said one of the ways of achieving those aspirations is through using local expertise, goods and services and job creation for the citizenry.
Ghana has been in oil production for ten years since the discovery of oil and gas resources in commercial quantities in 2007. The Ghanaian Oil Commission Chief urged the Petroleum Authority to prepare and manage the expectations that comes with the discovery of oil and gas.
Those expectations, according to Faibille can only be met by the implementation of local content policies for job creation and general prosperity. Develop local capacity or capabilities in all aspect of the oil and gas sector value chain through education, skills and expertise development, transfer of technical know-how.
He says since petroleum exploration are quite costly, Uganda should put in place budgetary and cost control measures so that petroleum revenues are not eroded by costs which may not be necessarily be considered as allowable petroleum costs.
“As new Petroleum producer, the Petroleum Authority of Uganda should ensure and consider cost added as a very important function” said Egbert Isaac Faibille.
He said from Ghana’s experience, the best way to create a stable environment for investment deal with the oil companies and other stakeholders in a transparent and a legally sound manner consistent with international best practices.
“As regulators, you must enforce the laws in a fair and nondiscriminatory manner.” Cautioned Faibille The office of the Auditor General in Uganda disallowed over 250 billion Shillings (USD 70 million) claims by some of the licensed oil companies in Uganda.
The funds had been claimed as recoverable costs in oil exploration and drilling. The rejected costs had been inflated by the companies to claim more money from the government when oil production begins. Petroleum Authority Executive Director, Earnest Rubondo said the first five years have been characterized by building the institution while at the same time regulating the country’s oil and gas assets.
He agreed with his Ghanaian colleague that the challenge of meeting society’s increased the expectation of the benefits from the oil and gas sector has been enormous.
“This remains a challenge to manage but we are still going about it through engagement with the public” said Rubondo.
“The second challenge is the alignment of the country’s interest and those of the licensed oil companies. This has been a challenge for quite some. It leads to a delay in the implementation of the project. There are times when the country’s interests cannot align with the licensed company’s interest and require a lot of time to align them” he explained
Milestones and Challenges.
The challenges aside, Rubondo said through the years of existence the authority has put in place laws and regulations to guide the future of the sector.
He says the establishment of the National Suppliers register on which over one seven hundred companies have qualified and registered as potential supplier’s to the oil and gas sectors. He says only 517 companies had been registered and qualified by the time it was launched in 2017.
According to Rubondo, between 60-70 per cent of the companies registered and qualified on the register is owned by Ugandans. The Authority also has a national talents register. The talents register supports the monitoring the human resource capacity and technical skills from the oil and gas sector which are available in the country.
The national talent’s register which has been in place since last year has so far over two thousand eight hundred individuals with skills required for the oil and gas sector.
The talents register also comprises the companies that are looking for human capacity to employ. The Authority says so one hundred and eight companies have been registered as potential employers once activities in the gas sector resume.
Rubondo says his Authority is working with and ministries, departments and agencies to create linkages that could earn the country more revenue from oil and gas.
It is estimated that Uganda could earn up to twelve billion US dollars during 4-5 years during development.
“And this stage is crucial because most people think that the benefit from the oil and gas sector will begin the country produces oil and the revenue comes to the treasury. The key sectors that the Authority has begun to work with may start issuing these linkages. “he said
The sectors identified the Petroleum Authority include, the health, agriculture and land use planning among others. It was expected that the licensed companies should have taken a Final Investment Decision (FID) by the first quarter of this year.
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