CNOOC, dfcu points at post Final Investment Decision prospects
Kampala, Uganda | JULIUS BUSINGE | dfcu Bank held a half day engagement for its clients and stakeholders in the oil and gas sector on Apr.28 following the government’s bold step to sign key agreements that will see the country get first oil possibly by 2025.
Uganda and Tanzania three weeks ago signed three key agreements – Host Government Agreement, Share Holder Agreement and Tariff agreements – to kick off the construction of the East African Crude Oil Pipeline (EACOP).
Godfrey Mundua, the head of corporate banking at dfcu said the bank is ready to offer financial solutions to the private sector in the oil and gas, but must have legal status, collateral, cash flow records, quality employees, good corporate governance structures and systems.
He said dfcu’s financing to the sector includes a broad range of financial solutions including; contract financing of up to 70%, unsecured loans of up to Shs500m, guarantees, invoice/certificate discounting of up to Shs200m, LPO financing, letters of credit, import loans and asset financing.
James Musherure Rujoki, the senior national content officer at Petroleum Authority of Uganda said the country is optimistic that the sector opportunities will be realised given that support infrastructure like roads, the airport, refinery, pipeline are being worked on.
Rujoki said for instance, about one million people will be engaged in the oil and gas sector, meaning a lot of opportunities are in the pipeline.
Mathew Kyaligonza, the national content manager for CNOOC, said they will contract or deal with private companies that have clear records about tax returns, NSSF compliance, National Supplier Database presence, good corporate governance systems, financial status, policies, equipment and software, physical office and more.
He said, CNOOC continues to train SMEs engaged in oil related activities as the Final Investment Decision for the sector knocks.
This year, he said, they will be training 150 SMEs, 70 heavy goods drivers, 120 welders and more in preparation for first oil.
dfcu Bank’s Chief Executive Officer Mathias Katamba said, with the planned East African Crude Oil Pipeline, it is expected that the East African region will be transformed into a major oil player.
He said, while the $3.5bn oil deal will see the 1,443 kilometre pipeline pump Uganda’s oil from the Albertine region to Tanzania’s Indian Ocean Seaport of Tanga, it is important to note that about 80% of the pipeline will be on Tanzanian territory.
“…as a country, we must make the most of the benefits from the work that will be carried out on the 20% of the Pipeline on the Ugandan side,” he said.
Katamba added that the bank is ready to provide financial solutions that will position its customers to fairly compete and win some of the contracts.
Elly Karuhanga, the chairman of Uganda Chamber of Mines & Petroleum, said oil and gas is a big elephant that entered Uganda and will not go back.
He warned banks “to ensure money is available to feed this elephant.”
He said, it is expensive to invest in the sector but it will pay off in the long term when government starts to earn from it and private sector reaping.
A total of US$15-20bn is expected to be invested in the sector – which is slightly over half of Uganda’s Gross Domestic Product – currently reported at approx. US$35bn.