ABSTRACT Since 2006, Uganda is bracing itself for oil and gas production and engaged in preparing and signing Production Sharing Agreements (PSAs) with international companies. However, a major concern for oil sector stakeholders is the current low level of local gainful participation. This concern is heightened by the hard fact that the oil and gas resource is non-renewable. So implications are that for the time the resource exist, Uganda’s socioeconomic setting must sustainably gain what could be described as an share. This study therefore was concerned with investigating ways and means in which the local companies and citizens participation could be promoted towards reaping maximum possible gains. Recommendations of a strategic nature are made to Government of Uganda (GoU) and other stakeholders as advocacy points prepared from gaps found to exist in policy and implementation. This will narrow existing gaps and fast-track a pragmatic enhancement of local sector players. The objectives of the study were: to determine capacity needs for local companies and citizens to gainfully participate in the oil and gas sector of Uganda; find out the extent to which existing legal and policy framework provides for the participation of nationals and local companies in the country’s oil and gas sector; and to identify necessary strategies and actions for building capacities of nationals and local companies for gainful participation in the oil and gas sector. The conceptual framework presented dynamics of dependent and independent variables as well as the intervening variables. The independent variable considered was: Capacity Enhancement of local companies and citizens which comprised of: Skills development curriculum for Uganda nationals; Availability of Training and Support infrastructure for Uganda Citizens (in terms of Existence of Technical and Financial Capacity Enhancement facilities for local companies; Preferential tax regimes and other provisions providing for increased participation) capacity enhancement oriented towards increased participation of national and local companies. The dependent variable under consideration was: Participation of nationals in the Oil and Gas sector and for analysis, broken down into: the number of local companies participating in the Oil and Gas sector and the size of transactions accorded to citizens and local companies; and the number of citizens employed in oil and gas sector. Intervening variables under consideration were: Contract adherence by International Oil and Gas companies; and Readiness of National Oil and Gas Companies to embrace local participation. Literature reviewed was relevant to the working of the variables in the oil and gas dynamics in Uganda and partly in Nigeria. The research design opted was both qualitative and quantitative. Data collected from respondents was subjected to correlation analysis and represented in tables that revealed significant correlation between the variable selected. Factual data was also collected from respondents on strategic issues, synthesized and reported in this document. On the overall, the research design was guided by research objectives, questions and a problem. Out of a population size of 120 target respondents, a sample size of 115 was selected through stratified and purposive sampling was employed targeting: officials from Government Ministries Departments and Agencies (MDAs); Officials from Oil Exploration and Production Companies; citizens employed in the sector; members of sector civil society Advocacy groups; and members of parliament responsible for the Oil and gas sector. A pilot test was undertaken before a major launch of the main research to help check on the feasibly of the data collection tools. Cross tabulation was used to present data and analysis was by Microsoft excel and SPSS. Findings and recommendations constitute: needs assessment for the oil and gas sector by GoU machinery or perhaps through contracting experienced international auditing firms to accomplish the task; urgent curriculum development to allow for increased participation in the sector for citizens and local companies with suggested content as: health and safety skills broken down into: Emergency First Aid; Fire Training; Manual Handling Skills; Risk Assessments; Working at Heights and Lifting Operations; Environment awareness and waste management; Forklift Operations; Telescopic Handler Operations; Mobile Scaffold; and Defensive Driving. It is recommended that local companies be equipped with sector Business Ethics (BE); Corporate Social Responsibility (CSR); and Exposure of local company operations successes in other oil resourced countries for the benefit of sharing and adoption of best practices. In the case of Training and Support Infrastructure for Capacitating Local Companies and Citizens Participation it is recommended that sector players led by Government build sector support infrastructure like schools, colleges, roads, communication, hospitals, and social protection institutions. Preferential tax regime and other fiscal provisions are proposed including: tax rates on profits and dividends; Tax holidays; Tax Credits and Aid; Accelerated Tax Depreciation; and Tax loss carry forward. In the case of Participation Ratios for Citizens and Local Companies it is recommended that ratios are continuously reviewed by the Parliamentary sector committee on oil and gas to reflect promotion of the desired accelerated participation nevertheless participation ratios should be increased to reasonable and safe rates as local participants gain experience. It is recommended that Sector Reviews be made regular to enable government build a database for gaps and action plans covering the entire sector in regard to promoting citizen’s participation.
TABLE OF CONTENT Sr. Content Page Abstract ii Table of Contents iv List of Acronyms vi Chapter One: Introduction 1.1 Introduction 1 1.2 Background to the Study 1 1.3 Problem statement 3 1.4 Purpose of the Study 4 1.5 Study Objectives 4 1.6 Research Questions 4 1.7 Scope of the Study 4 1.8 Significance of the Study 5 1.9 Conceptual frame work 5
Chapter Two: Literature Review 2.1 Introduction 7 2.2 Concepts of Local Content and Citizens Participation 7 2.3 Oil and Gas Local Content in the Promotion of Citizens Participation in Uganda 9 2.4 Local Content: Case for Nigeria 9 2.5 Skills Development Curriculum in the Promotion of Citizens Participation in Uganda 9 2.6 Training Infrastructure in Promotion of Citizens Participation in Uganda 10 2.7 Existence of Technical and Financial Capacity Enhancement for Local Companies in Uganda 11 2.8 Tax Policy for Promotion of Citizens Participation in Uganda 12 2.9 Participation of Nationals in Oil and Gas Sector in Uganda 13 2.10 Intervening Variables 14 2.11 Research Gaps 15
Chapter Three: Methodology 3.1 Introduction 16 3.2 Research Design 16 3.3 Variables for the Study 16 3.4 Sample Population 17 3.5 Sample size 17 3.6 Sample Selection 17 3.7 Data Sources and Collection Methods 18 3.8 Data Collection Tools 18 3.9 Research Procedures 19 3.10 Data Presentation, Analysis and Interpretation 19 3.11 Anticipated Limitations and Mitigations 19
Chapter Four: Presentation and Interpretation of Findings 4.1 Introduction 20 4.2 Characteristics of Respondents 20 4.3 Recruitment of Personnel for Participation in the Oil and Gas Sector Companies 24 4.4 Proposed number of Sector Local Companies and Citizens 29 4.5 External Factors 30 4.6 Correlation 30
Chapter Five: Conclusions and Recommedations 5.1 Introduction 31 5.2 Capacity Development, Local Company and Citizens participation in the Oil and Gas sector of Uganda 31 5.3 Training and Support Infrastructure for Capacitating Local Companies and Citizens Participation 32 5.4 Preferential tax regime and other fiscal provisions 32 5.5. Proposed Participation Ratios for Citizens and Local Companies 32 5.6 Continuous and Regular Sector Reviews 32 References 34 Appendix 1: Confidential Research Questionnaire Appendix II: Correlation Analysis Between Independent And Dependent Variables 39 LIST OF GRAPHS 4.2.1 Analysis of Gender of Respondents 20 4.2.2 Age-Group of the Respondents 21 4.2.3 Marital status of respondents 22 4.2.4 Education Level of the Respondents 23 LIST OF TABLES 3.1 Sample Population Strata 18 4.2.1 Gender of the Respondents 20 4.2.2 Age group of Respondents 21 4.2.3 Marital Status of Respondents 22 4.2.4 Education Level of the Respondents 23 4.3.1 Nationals and Expatriates Employed by the Oil Companies 24 4.4 Local Companies and Citizens Participation in the Oil and Gas sector of Uganda 25
