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Painful tales dominate long wait for Uganda’s first oil

Uganda oil blocks

Masindi, Uganda | THE INDEPENDENT | At Nyamasonga village, Bugahya County in Hoima district, waste management firm EnviroServ seems to run by the script.  The G4S security guard at the gate reminds visitors to disinfect their hands and drive at 10 kilometres per hour once they enter.

Inside, men in blue overalls and reflector jackets with helmets make quick steps around the compound. Others drive around industrial trucks while the sound of the plant humming can be heard to give an allure of beehive-like activities.

Only that it is not the case. “It looks like a lot is going on but there isn’t,” quipped Peter Odil, the plant supervisor.

EnviroServ, a merger of South Africa’s EnviroServ and Uganda’s Green Albertine Limited was set up to manage Uganda’s industrial waste – and mainly from oil activities. By March 2015, the company says it had finished construction and thus ready for work.

But the waste didn’t come as oil activities slowed down. Today only about 30 per cent of the company’s plant is currently being used – officials cynically told us “we’re not being underutilized. We are not utilized.”

The only waste at the plant is the one generated earlier during the exploration stage – from Total E&P, Tullow, and China National Offshore Oil Company (CNOOC) activities.

With the company operating below capacity and running short of funds, it has had to make painful decisions. Albert Kyaligonza, the EnviroServ Safety Health Environment and Quality Manager said the company has cut its staff in Hoima from 33 to just 14. Community programmes have also been cut because of the lack of money to sustain them.

Yet EnviroServ is but a portrait of the many companies that invested early in anticipation of the first oil but all seems not well with extended delays and uncertainty that shrouds the industry.

When Uganda discovered commercial oil reserves in 2006, the government urged Ugandans to prepare to supply the sector, with production target put as early as 2009. The country has failed to beat every target since then.

With the target for the first production becoming more uncertain, companies have seen scale back of activities, staff layoffs, redundant assets, and receivership as early bird move to prepare for Uganda’s oil industry seems to backfire.

Oil companies too – Tullow Oil, Total E&P, and China National Offshore Oil Company – have not been spared. In Hoima town, the hitherto fizzy office of CNOOC is shut, symbolic of the uncertainty that has hit the sector.

There have been long disputes about the refinery.

Tullow has laid off some staff, with one of those retrenched anonymously telling us; “I never thought this could happen”.

Total has cut foreign staff at its Kampala office from 20 to 10, according to a knowledgeable person.  The local staff could also be cut too; we have been told. The company has also suspended its initial activities for the oil pipeline.

Dennis Kakembo, a lawyer and the Managing Partner of Crystal Partners Advocates, says the impact of the slowdown has been both at the personal and business levels.

He left a lucrative job at global audit firm Deloitte and Touche and returned to Uganda to start a law firm focused on oil and gas. From 2017, they took on space, hired staff and readied themselves for the industry to take off. It was not to be, he said. “In 2018, it was particularly hard for us,” he added.

As government told Ugandans to prepare for up to USD 20 billion expected to enter into the market when the activities in the oil sector begin, shrewd Ugandans reasoned housing, hotels would be on-demand. Many reached out to banks’ credit sections and asked for money. The banks obliged yet a lot of them remained empty and foreclosures took centre stage.

“This was speculation,” said Judy Rugasira, the Managing Director of estate agent Knight Frank Uganda. “We have seen more and more empty spaces available on the market.”


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