We almost sank due to debts, says Bemuga chairman

Ben Mugasha, the Bemuga Holdings speaks during the interview. PHOTO BY RAINHER OJON

What you need to know:

When the oil buzz started Bemuga Holdings sensed there would be opportunities. He moved in but immediately suffered setbacks that almost took the company under. Heavily indebted, Bemuga has fought on and now seems to have rose from the trenches of debt. Fortunately, it is not too late to get in again. Oil prospect look to be on the cards. Rainher Ojon caught up with Ben Mugasha, the Bemuga Holdings chairman to speak about the company’s plans and what had happened then.

You lost nearly went under a few years ago. What exactly went wrong?
It has been tough. We mobilised equipment and other related preparations rather too early.
Because there were delays in issuing production licenses after 2015, we got affected.
We had thought that activities in the oil fields would follow a sequence of patterns but that was not the case.

What was the magnitude of your loss in the process?
We had bank loans worth billions of shillings. Off course we had staked our properties against these loans.
We have lost some of those properties but we have taken courage to move on and are keeping our fingers crossed with the hope that the current decisions on actual investments in oil production, the East African Crude Oil Pipeline Project and the Refinery, take off.

How ready are you for this?
We have had a good start of the year having entered a Joint Venture with a Dutch firm (Lodi Adrighem) that has supplied us with equipment worth $24m (Shs80b) under the first phase.
We already have the heavy duty trucks for tipping as well as moving fuel in the country.
Our plan is, by the time there is final investment decisions by the international oil companies, we can deliver on the auxiliary demands that they will create for our economy.

How are the terms of your engagement under the joint venture?
We have a training component worth $4m (Shs14.5b) through which we are training 100 Ugandan truck drivers with specialty skills in driving.
This touches on several safety-related measures on sites, transit, within destinations and so on.
We have assessors who are reviewing the drivers of the 65 trucks and will have internationally certified by end of this year, in readiness for the specifications that oil firms will benchmark for us.

Are those drivers being trained here?
We have been lucky to immediately secure a contract with Tororo Cement Industry, to haul limestone for their processing from Mororto to Tororo. This is the route through which we are having the drivers trained, under manoeuvrability, site and on road safety measures, all through the five hour 208-kilometre journey to delivery.

But the materials of the product that they are carrying is different?
That forms the basis for this early training. Remember there is going to be a lot of preparatory field activities happening between now and when actual commercial production starts.
We also have a new task with the Uganda National Oil Corporation, to move fuel products all the way from Eldoret in Kenya to the fuel reserve facility in Jinja.
These are also very specialised trucks that have high safety standards in particular touching on the environment-related issues.
Once we are done with our target of training100 drivers, we shall embark on the other lot of a further 100 more in order to reach 200.
All these will be Ugandan specialised truck drivers with capabilities to handle any type of modern oil and gas driving needs.

What is the way forward in expanding space for local content within this highly capital intensive industry?
You know just linking us with banks towards this local content thresholds is not enough.
Government needs to create a Development Fund for oil and gas businesses so that local entrepreneurs can be assessed on their merit for onward assistance to access affordable interest loans.
We definitely need support towards this aspect of financing. A number of companies that had invested in oil and gas have almost or fully collapsed and I can assure you, those that have had financial challenges, are going to find it difficult to get back on their feet.