Oil company boss to earn Shs51m monthly

When oil eventually starts to flow, the National Oil Company (Natoil) will be the most lucrative place to work in government if Cabinet approves pay proposals put forward by an inter-ministerial taskforce.

A copy of the taskforce report the Daily Monitor has seen shows that staff pay has been calibrated in dollars with the managing director earning $20,000 (Shs51m), making him the highest paid public sector employee at current exchange rates.

Sources knowledgeable about the report confirmed its existence.
“We just acted in time so that we do not rush when we finally form the institutions,” the sources said. “When the new institutions come in, this will be a working tool and relevant authorities, when appointed, will decide whether to adopt it or to reject it. But that is our reference to them.”

Kampala city executive director Jennifer Musisi is the current highest paid public officer, earning Shs48m.

Natoil is expected to run on a Shs19.5b budget by its fifth year in service. Its lowest earning employee, a driver, is proposed to earn $600 (Shs1.5m).

Addressing media editors in April, Ministry of Energy Permanent Secretary Kabagambe Kaliisa estimated that 1.2 billion out of the 3.5 billion barrels of oil so far discovered will be recovered when commercial production starts.

He put a conservative price per barrel at $70 dollars, meaning that the total value of Uganda’s recoverable oil is at least $84 billion (Shs216 trillion). Oil prices are prone to wild fluctuations though, with brent crude (the best quality) going for $108 per barrel on the world market as of yesterday, according to Internet news sources.

What makes the proposals eye-catching is that these are proposed entry level salaries with good prospects for growth. Managers and senior officers will earn between Shs38m and Shs20m, while personal secretaries and secretaries would take Shs10m and Shs6.4m, respectively.

The seven-man task force is reported to have completed its proposals three years ago in 2010. It was chaired by Dr Reuben Kashambuzi and had members like Mr Honey Mallinga from Petroleum Exploration and Production Department and Ministry of Energy senior policy analyst, Peninah Aheebwa as secretary.

“Owing to the rapidly increasing international oil prices, worldwide petroleum operations have increased dramatically and equally the demand for skilled manpower,” the report reads in part. “Recruitment and retention of such manpower will require that a competitive salary structure is recognised and implemented.”

The report, which also reveals the proposed management and staff structure for the Natoil, indicates that staff, minus the board of directors, will grow from 51 in the first year to 82 in the company’s fifth year.

This structure will require cumulatively a gross budget of Shs9.6b, Shs13.1b and Shs15b annually in salaries for the first five years, respectively which, according to the taskforce team, is much less than what oil companies in the private sector pay their staff.

The team reported that it compared salary structures in oil companies operating in Uganda, since the Natoil will be treated like any other licensee.

It is expected that the salary scale will be reviewed periodically to harmonise it with industry figures both in Uganda and internationally.
“By that time, significant revenues will be generated from petroleum enabling the government to easily meet the wage bill,” the report reads.
According to the team, good remuneration is important to ensure staff retention.

“With the increasing number of licensees in the country, the existing poor remuneration structures are yielding a worrying trend of movement of highly qualified people from government institutions to the private sector,” the report reads. “This is expected to continue and intensify as long as government does not substantially improve remuneration of its employees.”

Oil companies in Uganda, the report quotes, pay their general managers between Shs52m and Shs60m. On the international market, chief executives of national oil companies earn between Shs27m and Shs100m.

The Natoil will also require funds to cover rent for offices, transport, allowances, board of directors costs as well as computer hardware and software.

Expenditure
According to the report, Shs150m will be spent on office rent in the Natoil’s first year and the figure will grow to Shs250m in the fifth year.
It is also proposed that Shs1 billion be spent on training of petroleum engineers, geoscientists, economists, health, safety and environment officers, lawyers, data management in the first year of the company. The figure will grow to Shs2 billion in the fifth year.

The total estimated budget, including salaries for the first five years are Shs13b, Shs16b, Shs19.6b, Shs19.2b and Shs19.5b, respectively.
The formulation of the Natoil is underway with proposals for the board of directors and the memorandum of understanding and articles of associations presently before Cabinet.

Dr Kashambuzi refused to comment on his proposals yesterday. “How did you access that document?” he asked. “That document is confidential and I cannot comment on it. Call government that hired me to do the study.”

A similar response came from the Ministry of Energy spokesperson, Mr Bukenya Matovu. “Who gave you that document,” he asked. “It is supposed to be confidential so you go and ask the person who gave it to you to tell you whether it was adopted by government.”

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