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The East African : February 24th 2014
The EastAfrican 26 Special advertising section OIL AND GAS SECTOR IN EA Legal framework: Lessons for East Africa’s oil and gas ment oppo≥tunities fo≥ the ≥egion. The oil deposits in Uganda T and Kenya a≥e of comme≥cial value while Tanzania has significant quantities of natu≥al gas but the discove≥ies a≥e being made against a backd≥op of limited legal, ≥egulato≥y and policy f≥amewo≥k. The≥efo≥e, fo≥ the th≥ee states, it has been a ≥ace against time as discove≥ies p≥ecede the ≥ate of development of the f≥amewo≥k to suppo≥t the eme≥ging indust≥y. On the table has been local pa≥ticipation in the eme≥ging indust≥y and the enabling legislation. Local companies can pa≥ticipate as cont≥acto≥s, se≥vice companies and financial and legal se≥vice p≥ovide≥s. To pa≥ticipate as a cont≥acto≥, a demonst≥ation of financial ability, technical competence and p≥ofessional skills is key. he ≥ecent discove≥y of oil and gas in East Af≥ica has p≥esented t≥emendous invest- COMMENTARY CHARITY W. MAINA Legal perspective Local content capacity building will be beneficial and c≥itical fo≥ the indust≥y. On employment and t≥aining, th≥ee cad≥es of labou≥ a≥e ≥equi≥ed: Skilled, semi-skilled and unskilled. The last two a≥e in plenty, no doubt. The≥e is, howeve≥, a dea≥th of expe≥t knowledge and skills to take up the skilled jobs in the upst≥eam oil and gas indust≥y. Such include pet≥ophysics, geology and geophysics, ≥ese≥voi≥ enginee≥ing, management and economics, oil and gas law and p≥oduction and d≥illing technologies. East Af≥ica can d≥aw key lessons f≥om count≥ies with elabo≥ate local content devel- opment laws. Fo≥ example, Nige≥ia enacted a comp≥ehensive Oil and Gas Content Development Act in 2010. Notably, six decades afte≥ discove≥y of the ≥esou≥ce, Nige≥ia has only about 30 pe≥ cent of local pa≥ticipation in the upst≥eam indust≥y. Significant g≥owth became evident afte≥ the enactment of the laws but it has also been att≥ibuted to the divestitu≥e by some multinational oil companies of thei≥ assets to local fi≥ms. Salient featu≥es of the Nige- ≥ian Act that have cont≥ibuted to inc≥eased local pa≥ticipation include the establishment of a local content boa≥d which should be involved in the ≥eview of a cont≥acto≥s’ plans on employment and t≥aining. The cont≥acto≥ is expected to outline hi≥ing and t≥aining needs with a b≥eakdown of skills needed. In addition, it is expected to give anticipated skills sho≥tages in the Nige≥ian labou≥ fo≥ce with a Operating an oil refinery and other infrastructure is a rsiky investment p≥ojection of specific t≥aining ≥equi≥ements and expenditu≥e ≥equi≥ed to implement this employment and t≥aining plan. Reg≥ettably, a focus on uni- ve≥sities in East Af≥ica shows the unavailability of cou≥ses on upst≥eam oil and gas specialties despite the cost of t≥aining ab≥oad being ve≥y expensive. In Nige≥ia, a cont≥acto≥ is ≥equi≥ed to ensu≥e ≥easonable e≠o≥t within ≥easonable time to supply t≥aining locally o≥ ab≥oad. It is unde≥ an obligation to have a Nige≥ian national unde≥study each incumbent expat≥iate fo≥ a minimum pe- FEBRUARY 22-28, 2014 ≥iod befo≥e the position can be wholly Nige≥ianised. Investor interests To take ca≥e of investo≥ in- te≥ests, only five pe≥ cent of management positions can be held by expat≥iates. Fu≥the≥, Nige≥ian independ- ent cont≥acto≥s a≥e given fi≥st conside≥ation in the awa≥d of oil blocks and oil field and oil lifting licences in all p≥ojects fo≥ which a cont≥act is to be awa≥ded. The≥e is also exclusive conside≥ation to indigenous se≥vice companies that demonst≥ate owne≥ship of equipment, Nige≥ian pe≥sonnel and capacity to execute such wo≥k to bid on land and swamp ope≥ating a≥eas fo≥ cont≥acts and se≥vices. The ope≥ato≥ must submit a detailed plan setting out how it and its cont≥acto≥s will give fi≥st conside≥ation to local goods and se≥vices. Also, it can only ≥etain the se≥vices of Nige≥ian financial institutions except whe≥e the local content monito≥ing boa≥d is satisfied in the cont≥a≥y. A cont≥acto≥ must maintain a bank account and ≥etain a minimum of 10 pe≥ cent of its ≥evenue acc≥uing f≥om Nige≥ian ope≥ations. Cha≥ity Wambui Maina is an advocate of the High Cou≥t of Kenya and legal counsel in an oil ma≥keting company.
February 17th 2014
March 3rd 2014