Government pursuing localization policies in oil and gas industry

IMPACT – MEDIUM

What is the change? The Ugandan government is planning to introduce “local content” requirements for the country’s oil and gas industry as a reflection of its commitment to compliance and to promote localization of the workforce in the sector.

What does the change mean? Local content regulations typically require companies to employ local nationals only in junior and intermediate level positions and to submit a succession plan to a government agency detailing the positions held by foreign nationals who have been granted work permits and the names of the local understudies who will replace each foreign national when his or her work permit expires.

• Implementation time frame: To be determined.
• Visas/permits affected: Work permits.
• Who is affected: Companies hiring foreign nationals in the oil and gas industry.
• Impact on processing times: Local content regulations tend to streamline the processing of individual work permit applications, but often additionally introduce a separate corporate-level application process that needs to be followed periodically before the individual work permit application can be submitted.
• Business impact: Businesses should anticipate heightened localization of the workforce in the industry and greater regulation.

Background: Uganda intends to invest US$20 billion over the next five years to develop 15 oil fields and construct a new refinery and export pipe line. To maximize the long-term economic benefit of the investment, the government is planning to introduce local content requirements. To that end, a senior level Ugandan delegation, led by the Ministry of Energy and Mineral Development’s director of petroleum, recently visited the Nigerian Content Development and Monitoring Board to discuss models and policies relevant to the oil and gas industry that have proven to be successful in Nigeria.

BAL Analysis: Companies operating in the Ugandan oil sector should expect the introduction of more uniform regulations sector-wide aimed at greater localization of the workforce and reducing the level of current dependence on foreign national skill-sets.

This alert has been provided by the BAL Global Practice group. For additional information, please contact your BAL attorney.

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