Is Uganda ready for the 150,000 jobs in oil sector?

The general manager of Tullow Uganda, Mr Jimmy Mugerwa (C) shares a light moment with guests during the launch of Tullow Oil’s report. The oil sector still faces many labour gaps. Photo by Faiswal Kasirye

KAMPALA- The oil industry will need thousands of welders, but not the ones you usually see putting together metallic chairs and gates.

The sector will also need caterers but not the type providing services akin to those makeshift restaurants where food goes for half a dollar.

It will also need engineers, lifters, geologists and truck drivers, among others to fill 150,000 jobs expected at peak when oil production enters advanced stages.
The majorly emphasised aspects for all jobs are “standards” and “quality”.
To contradict the perception of many naysayers in the country about the job creation and local content in the sector, last week UK’s Tullow Oil (Uganda), one of the three companies licenced to operate, released its country report titled, Creating shared prosperity in Uganda, that highlights opportunities and the untapped local potential.

Standards key
The company emphasised the need to meet international standards and the requisite certification to offer services in the industry.

“The commercialisation of Uganda’s oil and gas resources is expected to generate up to 150,000 indirect and direct jobs… and thousands of opportunities for the oil and gas industry suppliers,” Mr Jimmy Mugerwa, the Tullow General manager, said, adding that the job estimates were based on studies on experiences from oil producing countries such as Trinidad and Tobago and Ghana.

Areas of opportunity include: transport, hospitality, communications, banking, catering, waste management, IT services, construction, training, emergence services, advertising and public relations.

In many oil-producing African countries, locals miss petrodollars because of the sit-back and lax mentality of citizens who expect their governments to ignite a per capita fiscal caprice through monetary handouts.

Explaining the Nigerian scenario, the late Chinua Achebe in his book, The Trouble with Nigeria, described such behaviour as the ‘cargo cult mentality’–the illusion that without any sustained hard work, a fairy ship will, thanks to the country’s huge oil deposits, dock in their harbour laden with freebies and every goody people have always dreamed of possessing.

In such countries, it is common to hear civil society blaming oil companies for importing labour even for the ‘simplest’ jobs.

Last Friday, Tullow informed stakeholders that studies were done in about 25 industries with a lot of opportunities and where Ugandans could benefit especially at the peak of production between 2016 and 2018.

Mr Mugerwa said 13,000 workers will be needed at peak production in what he calls “direct, indirect jobs and induced jobs.”

The unanswered question is; how are Ugandans ready to tap into the sector?
The company’s study revealed that Uganda’s vocational schools produce about 7,000 craftsmen annually but the industry’s estimated demand at peak production stands at 5,500 craftsmen.

These include drivers, welders and lifters who must have international certification.

The country currently has one training institute, the Uganda Petroleum Institute Kigumba (UPIK), preparing Uganda for the oil service industry.

The institute offers a diploma in technical skills related to oil and gas and additional six-month training in Trinidad and Tobago.

In an earlier interview, the UPIK principal, Prof Charles Kwesiga, said there is need for awareness campaigns to inform potential service providers of the available jobs in the sector.

Another firm in the oil pipeline is Specialised Welding Services in Muyenga, Kampala.

Uganda confirmed the 750 million barrels oil commercialisation threshold in 2009 thrusting it in the fray as the continent’s new oil country and East Africa’s first.

Currently, the confirmed oil in place is 3.5 billion barrels with a recoverable rate of between 1.2 and 1.7 billion barrels.

Government and civil society have since the discovery been urging for increased local participation in the sector and a local participation policy is in the works.
The three joint venture partners; Total, Tullow and CNOOC, have sent more than 200 Ugandans abroad to study oil and gas on scholarship– Tullow has so far sent 40.

In its report on building capacity in the business community, Tullow, which has also invested a total of $2.8 billion (Shs7 trillion) in oil exploration and acquisition of Heritage Oil interests in Uganda since 2004, says the technical capabilities required by the industry take time to build and are not readily available in countries where the oil industry is still developing.

“In short term, we are working to ensure that local suppliers provide our security, catering and logistical services,” the report reads in part.

“Over the medium term, we will seek joint ventures and additional investment to train local suppliers to provide construction support such as civil engineering, building, welding and fabrication,” it adds.

According to Tullow, another area in demand is engineering and technicians.
“We produce about 600 engineers every year from universities, but the actual demand at the peak will be around 1,400,” Mr Mugerwa added.

“Technicians have a supply of 1,000 but demand at peak will be around 2,500, so we have a gap. The problem is that even with enough supply, quality is still a problem,” he added.

Responding to questions through email, Mr Jeff Baitwa, the managing director of Three-ways Shipping group, one of the most successful indigenous oil service providers, said the locals are not financially ready or equipped to match the sector requirements.

Skills lacking
“The people are not technically prepared to meet the skills demand and capacity is lacking in terms of services, products and soft skills like business management quality standards,” the email reads in part.

Mr Baitwa further says there is acute lack of information to the people on how the industry functions.

“People do not know how else to benefit from the industry without being directly involved in the actual oil operations,” he said.

“Government should put in place programmes and mechanisms to support and grow the local players faster to reduce the time it will take them to be fully involved in the industry.”

Since 2004, Tullow has spent $200 million (about Shs500 billion) on 550 local companies.

Mr Baitwa says the only way for new local players to survive in the industry is by associating with other local players already involved in the industry to develop their own skills, capacity, and competence.

“They should also identify other opportunities available as a spinoff of the industry. It is not all about the oil coming out of the tap,” he said. “They should also avoid sectarian, tribal or corrupt tendencies and also develop and evolve from small businesses to be able to compete well.”

At peak, the industry will need about 850,000 tonnes of material to be ferried to the Graben. This, according to Mugerwa, will probably need 30,000 trucks but currently all local service providers combined have around 2000 tracks.

“Apart from having an 80 per cent gap, quality is still missing and as of now only 200 trucks (of the 2,000) are up to standards,” Mugerwa said at the launch.
Although the magic could be in government availing information about the chances in the sector, Ugandans should, as Mr Baitwa says, go out and look for the opportunities in the sector.