Buy Uganda Build Uganda

What this means for Ugandans from a petroleum sector perspective 

At a time like this when the cliché ‘BUBU’ is the ‘in thing’, you can’t be left behind! Buy Uganda Build Uganda (‘BUBU”) is a policy geared towards promoting use of locally manufactured goods and use of local skills/personnel. The success of the BUBU concept will require us as Ugandans to position ourselves in order to play our respective roles in building the Ugandan economy and reaping from it.

The petroleum sector seems to have embraced this BUBU concept ahead of other economic sectors in Uganda. In 2013, the Government of Uganda introduced two new laws to govern exploration, production, storage and transmission of petroleum products. The two laws were the Petroleum (Exploration, Development and Production) Act, 2013 and the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, 2013. These laws replaced laws that existed at the time which did not appropriately address some of the issues that are pertinent to the sector.  The concept of national content (also commonly referred to as local content) was introduced in the new laws to give guidance on the level of contribution to national development that is expected from international players who are either contracting directly with government (licensees) or their contractors and subcontractors.

Uganda’s perspective of national content is hinged on the need to give preference to goods which are produced or available in Uganda and services which are rendered by Ugandan citizens and companies. Therefore a requirement to this effect was included in the new legislation. Further, a mechanism for monitoring achievement of this requirement has been prescribed by requiring licensees, contractors and subcontractors to provide a report of their achievement in utilizing Ugandan goods and services to the petroleum authority within sixty days after the end of each calendar year.

The desire for government to protect national content is echoed in the requirement for any provision of goods or services which are not available in Uganda to be undertaken by a company that has entered into a joint venture with a Ugandan company which must have a share capital of at least 48% in the joint venture.

The laws also introduced the requirement to demonstrate commitment towards maximising training and transferring knowledge to Ugandans in order to equip them with the necessary management and technical skills and expertise relevant for the oil and gas sector. The expectation is that the skilling process will take into account gender balance, consideration for persons with disabilities and the inhabitants of the districts in which petroleum activities take place.

The Minister of Energy and Mineral Development issued regulations in June this year which provide more detailed guidelines on how the broad requirements contained in the laws will be operationalize.

These national content initiatives bring Uganda in sync with other petroleum producing states which already have national content laws and regulations in place. What perhaps differentiates the various states is how national content is defined and achieved in each of the respective states. In African states such as Angola, Ghana, Nigeria and Chad, there seems to be a common underlying theme for national content, being the use of locally produced goods and services rendered by local indigenous people, although the specific measures for implementation may differ.

Over the next couple of weeks, I will be sharing with you insights into how Uganda intends to achieve its national content objectives highlighted in today’s article as contained in the regulations published in June this year. I will also share insights into how other countries have implemented national content, how they have benefited and what Uganda can learn from the challenges they have encountered.

I would like to believe that we as Ugandans welcome these very important initiatives that will give us an opportunity to participate in the petroleum sector. What we need to do on our part is to be fully aware of the initiatives, continue preparing ourselves to make use of these opportunities or start preparing ourselves if we have not already started. If we can’t do it for ourselves, I am certain we can do it for the next generations.

By Pamela Natamba - Tax Leader and Head of Oil & Gas Practice with PwC Uganda