Dr Ben Mugasha’s Bemuga Heavy Equipment in 2012 lost eight million dollars in an oil sector linked transaction which failed to materialize. But this did not discourage him, a renowned dealer in the transport industry who specializes in clearing and forwarding of heavy trucks has revived his business that it is now flourishing again.
Bemuga Forwarders Ltd is the biggest of local companies providing forwarding and clearing services to the oil sector. He owns trucks, tankers, crane loaders and other earth moving, drilling, and hauling equipment. He says he plans to acquire new and much more specialised equipment as the development phase gets underway. When he says, finally, that local players are not equipped to service the next phase of the oil industry, he possibly knows his business.
Mugasha, who is commonly known by his company’s name Bemuga has been instrumental in efforts to get government to agree to establish a local content fund to facilitate the financing of local enterprises participating in the oil and gas sector through the association of Uganda Oil and Gas Services Providers (AUOGS) has been pushing government to establish a local content fund. Oil-producing countries such as Nigeria, have established such funds.
“Without such a fund, there is no way we can achieve all our local content aspirations as a country,” said Dr. Mugasha while giving a synopsis of the mineral sector potential at the closure of Uganda Chamber of Mines and Petroleum’s annual Mineral Wealth Conference in Kampala. Bemuga Group part-sponsored the conference and also hosted a cocktail for over 500 delegates who attended the conference.
Dr. Mugasha said the discovery and eventual exploitation of Uganda’s oil resource is one of those once-in-a-generation events that can transform this nation.
He has since been advocating for 48 % local ownership of service companies in the Upstream Act to foster participation of locals in the industry.
“I believe that we need to organize ourselves as local service suppliers to earn from our country’s oil and transform Uganda,” he said.
“We need to register with authorities because in the oil business there are no shortcuts. I happen to be a member of the Presidential Round Table on oil, gas and energy and I know as local suppliers we can get financial support, training and many more now that Uganda’s oil is moving into the works stage,” the Bemuga chairman added.
The astute businessman added that oil companies’ fitness for contracts should be judged on a sliding scale on its commitment to local content promotion.
“The more local content a company has in terms of local equity partnership, employment of Ugandans, utilisation of local goods and services and technological transfer, the better chance it will have to win contracts in the industry,” Dr. Mugasha implored.
Mugasha said the problem was not the local companies’ lack of capacity but, rather unharmonized standards that the international oil firms demand for. He explained that oil companies require different standards. For instance, he said the association’s members are required to have different standards from each of the three main upstream companies, that is Tullow Oil, Total E&P, and CNOOC.
“Oil well services is normally a specialised and highly capital intensive area, so here the locals have got limited chances. Now that law needs to be operationalised, at least it gives us a bargaining ground. Even though it is not clear, it is ambiguous, it (still) gives us bargaining ground.”
“You will find some of these services, the locals may have 100 % while some of the other services, foreigners are having 100 %. This law allows fair sharing and ownership of a company operating in the sector.”
He also thanked the government for not rushed into oil production, preferring to first work on policies, but says capacity among Ugandans is still lacking.
“Speaking from my experience in working with foreign companies, President Museveni and his government were right not to rush this. Trust me Uganda has one of the best oil laws in Africa,” he said.
However, Dr. Mugasha asked government to consider some smaller projects such as waste management and basic logistics should be ring-fenced for local businessmen.
“You can imagine in the National Suppliers’ Database (NSD) one of the tools for regulating the procurement of goods and services in the petroleum sub-sector, 99 per cent of the 1000 companies that qualified are Chinese so to tap the new developments, unity will enable local contractors participate in these large government tenders.”
The database for 2018 will be published by the end of December, 2017, TheUgandan understands and a request for application for registration together with submission guidelines closing on October 31 has been published on www.pau.go.ug