PAU registration after signing of the FID by TOTAL in Uganda
Following the signature of the FID by Total in Uganda, the registration at PAU has become a pressing issue for companies willing to operate in the Tilenga and EACOP projects. Indeed, the registration on the NSD of the PAU is a requirement for any company willing to operate on the oil project.
Signing of the FID in Uganda
The signing of the FID took place on Sunday 11th April 2021. Three oil agreements were signed, giving involved companies the authorisation to award the main Engineering, Procurement & Construction Contracts (EPC). These three agreements are: the Tariff & Transportation Agreement (TTA); the Host Government Agreement (HGA) for the Republic of Uganda; and the Shareholding Agreement (SHA) for the EACOP Company.
The FID represents an estimated $8 billion to $10 billion worth of investment expected to flow into Uganda. It puts Uganda on the global map for development and foreign investment. Once operational, EACOP will be the longest heated oil pipeline in the world, covering a total of 1443 Kilometers. It begins at Kabaale (Hoima District), goes through 10 districts of Uganda, and traverses Tanzania, terminating at Tanga on the Indian Ocean.
The oil extraction will take place at two oil fields; the Kingfisher field, operated by China National Offshore Oil Corporation Ltd (CNOOC), and the Tilenga field, operated by Total S.A. Tilenga and East Africa Crude oil Pipeline (EACOP) will create an estimated 190,000 jobs both directly and indirectly. Increased employment opportunities is expected to raise the per capita and therefore increasing the country’s Gross Domestic Product (GDP).
EACOP will link Uganda and Tanzania, thus providing an opportunity for cross cultural exchanges and community development. Movement of goods and people will help strengthen the economies of both countries.
Petroleum Authority of Uganda (PAU) and its role in FID and construction of EACOP by Total
The PAU is a governmental organization founded in 2015 to regulate and monitor the petroleum industry in Uganda. The Authority is also responsible for ensuring that the pipelines and associated facilities are safe and secure to all; inclusive of persons, environment and properties. Thus ensuring that Uganda is a sound investment destination.
According to the Petroleum Authority of Uganda (PAU), the key aspects of regulating the oil and gas sector are numerous. They include efficient management of the petroleum resources, monitoring of operations to ensure cost efficiency, ensuring projects are economically feasible, and growing the participation of Ugandans in the oil and gas sector among others.
There are three signed agreements, Tariff & Transportation Agreement (TTA), Host Government Agreement (HGA) & the Shareholding Agreement (SHA). After signing of the FID by Total, the administration and monitoring will be done by the PAU. This is meant to ensure adherence of terms during implementation of the EACOP project.
The Petroleum Authority of Uganda (PAU) developed the National supplier database (NSD). The NSD lists all entities or individuals allowed to work or provide goods and services to the Oil & Gas sector. Registration to the NSD is compulsory for all companies planning to work on projects in the Oil and Gas sector. The list of authorised entities and persons is published by the PAU from time to time.
Opportunities for Ugandan Citizens
Signing of the FID will bring opportunities for Ugandan citizens. Through the Local Content policy, the Government of Uganda shortlisted a number of goods and services to be offered by its citizens. These include: transport, security, food and beverage, hotel management, catering, supply of locally available materials and ICT services.
The Petroleum Authority of Uganda (PAU) received financing from Fund for African Private Sector Assistance (FAPA) through the African Development Bank. This financing will go towards developing Micro and Small Medium Enterprises (MSME) Business Linkages on East African Crude Oil Pipeline (Uganda And Tanzania) Project. The MSME’s will be situated in the 10 districts along the EACOP route and aims at connecting the MSEM’s to international markets, thus leading to economic growth. Through this initiative, citizens will enhance their financial literacy skills, agriculture, animal husbandry, fisheries among others.
Opportunities for foreign investors
The investment opportunities that come with EACOP are not limited to Ugadan citizens only. The anticipated investment is the biggest in Uganda’s history and is therefore expected to unlock economic growth. Opportunities are expected to increase in construction, agriculture, hospitality, real estate as well as logistics.
Uganda offers greenfield developments, which can be an advantage, but also challenging for investors given the lack of infrastructure, pipeline, refinery and it’s distance from sea. The lack of these assets provides an excellent opportunity for international investors to implement state-of-the-art technologies and processes.
Furthermore, there is need for road infrastructure along the pipeline to enable access during construction. After the completion the roads will be used to access areas of the pipeline in case of maintenance.
Foreign countries could also benefit from the project by receiving tenders to supply technical materials for the pipeline construction. The project is going to create a need for highly skilled contractors from foreign countries, thus creating job opportunities for both foreigners and locals.
As we conclude, the signing of the FID between Uganda and Tanzania and the construction of EACOP by Total shows that there is great potential in East Africa. Under the supervision of the PAU this project is expected to open up opportunities not only for Uganda and Tanzania but for East Africa as well.
With the recently finalized EACOP agreements, more companies/ investors are expected to invest In Uganda. Now the FID is signed, for those interested in working on Total’s projects in Uganda, after registration with the PAU, one needs to conduct adequate research and get accurate information from agencies in charge.