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National Suppliers’ Database will foster local content in Uganda’s oil and gas sector

The oil and gas industry provides an opportunity to build the competitiveness of home grown businesses, while stimulating wider development.  Research indicates that international oil companies (IOCs) spend on suppliers outweighs their expenditure on tax and royalty payments.  This underpins the need to ensure that IOCs contribute to local content development, more so in developing economies.

Norway is often cited as a classic example of a success story on how local content can contribute to sustainable growth and development.  The World Bank reports that within 30 years of their first commercial discovery, oil companies in Norway were sourcing over 50% of capital inputs and 80% of operational inputs from Norwegian firms.  As a result, Norway currently exports its expertise across oil producing nations in various continents, including Africa.

The oil and gas sector in Uganda poised to bring in investment of close to US$20 billion during the next 3 to 5 years through the development of the 14 petroleum fields and petroleum related and support infrastructure.  For a country, whose annual GDP is US$ 27 billion, it is critical to domesticate the Norwegian experience so that a significant portion of this investment is retained in the country. This will be achieved through emphasising Capacity building of Ugandans; Transfer of knowledge and technology; Use of locally produced goods and services; and Employment of Ugandans.

The oil and gas sector has a legal regime giving priority to Ugandan citizens, goods and services in the supply Chain. This is without compromise on quality of works and services.

The Petroleum Authority of Uganda (PAU), among other things, monitors and regulates the implementation and compliance with the national content requirements set out in the law in line with international best practice for the petroleum industry.

PAU has developed the National Suppliers’ Database (NSD) as one of the tools for regulating the procurement of goods and services in the petroleum subsector. The NSD is a web-based platform for registering entities and persons with the capacity to supply the oil and gas sector.

The Authority completed the design of the NSD in 2016 and invited, through the media and different fora, potential suppliers to apply for qualification.  Registration of the potential suppliers for Uganda’s oil and gas sector started in December 2016 and the NSD was published during July 2017 with 511 qualified and registered; the database will be updated annually. 

The database for 2018 will be published by the end of December, 2017 and a request for application for registration together with submission guidelines was published on www.pau.go.ug starting 1st September 2017 and closing on 31st October 2017. Persons and entities already registered on the NSD 2017, which can be accessed for viewing on www.pau.go.ug, only need to update the information they previously submitted and to also confirm their willingness to be on the NSD for 2018

The NSD will ensure that Government is aware of the experience and capabilities of the qualified Ugandan and foreign companies in petroleum subsector. This will enhance transparency in the procurement process and also provide a one stop database for procurement for licensed oil companies thus shortening the procurement process.

The Authority has automated the database by making submissions and responses digital.  The database will then be developed to support the putting in place of a Joint Qualification Systems and an E-market for the procurement of goods and services in the country’s oil and gas sector. Once fully developed the NSD will provide an opportunity for a transparent and standardized procurement cycle which will lead to increased competition and efficiency in the supply chain, and enhanced visibility for Ugandan businesses. Malaysia, Brazil, Norway, Nigeria, Angola and Israel run platforms of this nature.  

As Uganda continues with the race to become an oil producer, local content development will go a long way in contributing to achievement of the sustainable development goals by promoting fair, inclusive and sustainable economic growth and industrialization, fostering innovation. It is also a massive opportunity for the youth to take advantage of the opportunities.

 

Ali Ssekatawa

Director for Legal and Corporate Affairs

Petroleum Authority of Uganda