The hurdles facing the Petroleum Institute

Published 4 years ago -

Oil drilling in the Albertine Region in Western Uganda. Photo Credit : OilInUganda

When Ugandans received the news of oil mineral resource discovery in the country, a lot of expectations crossed to their minds. These ranged from positive to negative expectations but with the continued assurance from the government officials on the proper management of the resource, the positive expectations have always taken the lead. Ugandans expects that the with oil discovery and its exploration and production, jobs will be created.

They also hope that the revenue which will be generated from the resource be used to establish good infrastructures like roads, railways and social amenities like clean and safe drinking water, hospitals and schools mention but a few. According to the Tullow Oil- Uganda report of 2013, it is expected that about 150,000 job opportunities are to be created in the Oil and Gas Sector. With the potential areas of opportunity including: transport, hospitality, communications, banking, catering, waste management, IT services, construction, training, emergence services, advertising and public relations.

For the above to be realized, Government has to establish a favorable environment to prepare its citizens for those potential opportunities. This can be done by establishing education institutions that can train citizens in the relevant fields required in the sector in order to increase productivity and income activities in the economy.┬áSince government could not find monies, out of the collected revenue to establish infrastructures that could facilitate the development of the oil sector. It had to seek funding from financial lending institutions. Hence the government’s proposal to borrow up to US $ 145m from the International Development Association of the World Bank to finance the Albertine Region Sustainable Development Project.

The project is composed of three components, that is Regional Access and Connectivity which is to cost US$ 95m; Local Access, Planning and Development to be funded to a tune of US$ 25m; and Skills Access and Upgrading with a cost of US$25m- which is the main point of discussion.

The component is designed to upgrade the Business, Technical, Vocational Education Training (BTVET) quality in the oil and gas sector. It will support the government program of Skilling Uganda Strategy by funding the upgrading of the Uganda Petroleum Institute in Kigumba (UPIK) -which will focus on training specialized technicians for the petroleum industry in petroleum operations, mechanical maintenance, electrical maintenance and instrumentation; Uganda Technical College(UTC)-Kichwamba and also a new institute will be established in Nwoya District.

This loan request stalled in Parliament for about a year. The Parliamentary Committee on National Economy which is responsible for scrutinizing loan requests from the government attributed its delay to approve the loan on the failure by the Minister of Education to appoint a Governing Council and Principal of UPIK. The committee members who visited the Institute described it as “a white elephant”.

In his own words the chairperson of the committee Xavier Kyooma, Ibanda County North Member of Parliament while hosting the Minister for Education Jesca Alupo on the matter, he said: “This loan has been before the committee for about a year. The President has on several occasions whenever he visits the Albertine region blamed Parliament for not approving the loan yet the problem lies with the Ministry of Education which failed to resolve the governing issues at UPIK”.

However, the Minister for Education explained that there is no vacuum in the management of the Institute because she extended the contract of the Task force which was in charge of the management of the Institute as well as laying the Statutory Instrument before Parliament that establishes the Institute. she also informed the Committee that she met with World Bank Officials and requested them to approve the loan as the ministry institutes the Council.

We need to remind the Minister that immediately the loan is approved, it will become effective and the country will start to incur costs in terms of interests. For this particular loan, the service charge was 0.75% per annum on the disbursed and outstanding balance of credit . There was also a  commitment fee at 0-0.5% per annum on outstanding balance of un-disbursed credit though the repayment period is 30 years including 10 years of grace. The Committee reported back to the House recommending that Parliament approves the loan request with the exception of the funds for UPIK. The Loan request was finally approved on 22nd July 2015.

We leave the blame games aside and turn to the loss made to Ugandans as a result of the delay by government to mobilize resources for this crucial activity. In the first place government is capable of raising this money which was required to ensure functionality of this Institute without necessary going for borrowing. It is just a matter of understanding our priorities.

With ongoing oil related exploration activities, it means that the oil and gas sector is dominated by foreigners at the expense of a big number of unemployed youths just because of the absence of a functioning institution which would have equipped Ugandans with the required skills. This may also result to future dependency on foreigners in the sector because Ugandans have not been prepared

In preparation for other future projects of this nature, parliament should appropriate resources for these activities in time such that masses can be prepared in advance. Secondly, it should also improve on its oversight and accountability mechanisms such that such government officials whose inefficiency costs the masses to that tune are held accountable and brought to book.



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