Local Content: Uganda’s mixed bag of oil fortune

Nigeria oil worker01 January 2014, Kampala – Early this month, Tullow Uganda awarded a contract to Supreme group, a British catering company with a global footprint, to provide catering services to Tullow’s camps in the Albertine graben. The contract took effect on December 1, 2013.

Supreme group took over from Equator catering services, a company owned by two foreign nationals, Peter Bowser and Charles Case, which had been providing catering services to oil companies operating in western Uganda. While Tullow Uganda has a right to contract any service provider, this particular contract has raised concern among local service providers, with many arguing it is against the provisions of the petroleum laws.

Section 125 of the Petroleum (Exploration, Development and Production) Act, 2013 compels a licensee like Tullow, its contractors and subcontractors, to give preference to goods and services that are produced or available in Uganda and rendered by Ugandan citizens or companies.

It further provides that in case the goods and services required are not available in Uganda, they shall be provided by a company that has entered into a joint venture with a Ugandan company. The local company should have a share holding of at least 48 per cent in the joint venture.

Peter Magelah Gwayaka, a lawyer and researcher at a policy think tank, Advocates Coalition for Development and Environment (ACODE), says by contracting Supreme group, Tullow violated section 125 of the upstream act.

“Did it [Supreme group] enter into a joint venture with a Ugandan company as the law requires? If not, it is clearly against express provisions and the spirit of the petroleum acts,” he argues.

Gwayaka said Tullow’s action was one of the examples which show that some national content provisions in the petroleum laws may remain on paper and never be implemented. While Conrad Nkutu, the corporate affairs manager at Tullow Uganda, confirms that Supreme group is foreign, he disagrees with Gwayaka. He argues that Ugandans should not look so much at the ownership of the company, but the jobs the company will create and the goods and services it intends to procure.

Nkutu says the tendering process was transparent.

“The company doesn’t only provide catering, it runs the camp like a four-star hotel. It does laundry, cleaning, spraying and others,” he said.


–  The Observer

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