MPs accuse oil companies of shunning local farmers

Feb 15, 2017

Ministers appeared before the committee on natural resources to update it on the developments in the oil and gas sector

MPs have raised concern about oil companies rejecting foodstuffs such as eggs and chicken from local suppliers.

The MPs said oil companies prefer to import these foodstuffs saying the local suppliers do not meet international standards.

The MPs expressed the concern while the meeting a team from the Ministry of Energy and Mineral Development led by minister Eng. Irene Muloni and Peter Lokeris, the state minister for minerals.

Muloni appeared before committee on natural resources to update the committee on the developments in the oil and gas sector.

Ann Maria Nankabirwa (Kyankwanzi) said the local communities in the areas where oil exploration is taking place can supply all the food stuffs needed by oil companies.

"The aspiration for international standards is limiting our people. We breed goats, pigs, cows but we cannot supply them," Nankabirwa said.

The committee chaired by Dr. Keefa Kiwanuka Keefa (Kiboga East) queried the high expectations the government was putting on the sector which has contracted globally.

"After 2006 many people borrowed money to invest in sectors that support the oil and gas industry. They were hoping that oil production would start in 2010, but it was shifted to 2018 now the date has been pushed to 2020. Those who invested lost money. What is the reason for raising people's expectations about oil?" Keefa asked.

Keefa said the price of oil has fallen and oil companies were cutting down jobs and others closing down or scaling down on their activities but Uganda was not looking in these issues.

He noted that studies show Uganda would get back its money from oil investments (break- even point) when the price of oil stands at between $60 to S$70 per barrel. He wondered why the government set its break- even point at between $30 to $50 per barrel.

"The civil society is petitioning for more transparency in the oil and gas sector. People who trained in oil have not got jobs, you are lucky you have not yet been trapped by oil" Keefa said.

In response to the MPs concerns, Muloni said efforts were being made to train local suppliers on proper packaging of food stuffs.

"We need to help our people to package tomatoes, eggs, potatoes properly. The way we present our suppliers sometimes can put off some people. We need to encourage people to go into joint ventures with people who have technology, finance to learn from them and work with them," Muloni said.  

Muloni said they have asked that the supply for local goods should come to Ugandans as long as they need quality and quantity standards.

The minister said various activities are on- going to see that Uganda gets it first oil barrel in 2020. The minister added that by the end of next month they expect to have chosen from three companies government is scrutinizing, the lead investor in Uganda's oil refinery.

She said the cost of oil exploration in Uganda was low and therefore the break- even point was low.

Muloni said investing was a risk and it was true that some investors lost money.

"When prices of oil went down some people lost appetite to invest in the sector. But prices are cyclical; we expect it to go up and down. While the prices have been low we used that time to prepare ourselves to develop the industry" Muloni said.

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