May 5, 2010 / 11:53 AM / 9 years ago

Proposed oil law seeks priority for Uganda suppliers

* Law to boost local economy

* Seeks to boost local sourcing of goods and services

By Elias Biryabarema

KAMPALA, May 5 (Reuters) - A proposed law to manage Uganda’s burgeoning oil industry will require firms to give priority to Ugandan suppliers and personnel when seeking contractors and employees, a draft obtained by Reuters said on Wednesday.

East Africa’s third largest economy struck significant oil deposits in 2006 in the Albertine Rift that straddles its border with the D R Congo.

Reserves are estimated at 2 billion barrels and limited commercial production is due to start this year.

The bill — The Petroleum (Exploration, Development, Production and Value Addition) Act 2010 — will require petroleum firms to give the government a list of its contractors and subcontractors at the end of each calendar year.

“The licensee (oil firms), its contractors and subcontractors shall give priority to competent citizens of Uganda and registered entities owned by Ugandans in the provision of goods and services.”

The bill — due to be tabled in Parliament in the second half of the year — will require oil firms and their contractors to give preference to Ugandan products and services if they are competitive in pricing, quality and availability.

The annual reports submitted to the government are also expected to show the firms’ record in using Ugandan goods and services during a given calendar year.

Uganda’s petroleum industry is being built from scratch and the government is eager to integrate the local private sector into al aspects of the industry and maximise the impact of oil production on the local economy.

“Tullow Oil Uganda already prioritises Ugandan companies where we can and report regularly on progress to government,” said Brian Glover, General Manager of Tullow Uganda.

“There’s a great opportunity for local content to grow in this new sector.”

Ugandan government officials were not immediately available for comment.

Foreign Investment in the budding petroleum sector has been surging since Britain’s Tullow (TLW.L) and Heritage Oil HOIL.L made initial discoveries.

France’s Total (TOTF.PA) and China’s China National Offshore Oil Corporation (CNOOC) (0883.HK) are pushing to gain a share of the Albertine Rift’s growing reserves. (Editing by George Obulutsa and Amanda Cooper)

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