In 2006, Uganda confirmed that it had discovered oil. It was a moment that would continue to define Uganda’s future. During the period of discovery and later developing the oil fields, logistics companies have played a crucial role. Right from the start as the country was in the process of discovering oil, logistics companies were moving equipment to the Albertine Graben.

Indeed the Oil and Gas did contribute to the growth of logistics companies. Entities likeThreeWays Shipping, Multilines and Bemuga expanded their fleet as a result of the demand by the oil companies. In fact, at the time when oil companies were awaiting the government to approve production licenses, the most affected operations were those of logisticscompanies. They were forced to restructure.

However, those were short-term blips. The long-term presents greater opportunities. The estimates indicate that even before oil is recovered, about $10billion will be spent. For Uganda’s economy, that money will be transformational. The estimate for jobs to be created is about 150, 000. Some of these jobs will be with logistics companies. It is important to note that the specialized jobs in the sector are the least whereas the non-specialized jobs – like drivers – are the most.

Once oil companies approve their Final Investment Decisions (FIDs) in the oil sector, then it will open up for further investment by logistics companies.According to the Uganda government, there will be vast equipment to bring into the country in order to deliver first oil. The equipment and materials – mostly imported – will come in through Busia, from Mombasa and Mutukula, from Dar-es-Salaam. These routes are devised into consideration of the discoveries locations in Hoima and Buliisa among others. Get equipment, people and materials to those areas could
be Uganda’s largest logistics “event” since Uganda’s independence.

The opportunity there lies in logistics companies investing in
anticipation for this pre-production “event”. It is an opportunity to exploit. Of course, the challenge for the logistics companies is the skills set that comes in especially in operating some of the heavy earth moving equipment.

Gov’t infrastructure projects interestingly, some of the benefits in the oil sector tie into the plans of the government. In order to be ready for first oil, the government will construct an oil refinery in Kabaale, Hoima District.

There is the private sector-led construction of an oil pipeline from
Hoima to Da-es-Salaam. Already the Uganda National Roads Authority (UNRA) has earmarked 10 “oil roads” for construction. These roads total nearly 700kms. There is the construction of a finished products pipeline from Hoima to Wakiso. Currently, work is ongoing for the construction of an International Airport in Hoima to cater to the aviation demand that comes with oil.
Ultimately, all of the above projects can be linked to oil. They are
creating an opportunity for the logistics sector. On top of improving transport, they also present an opportunity to supply and distribute some of the materials used in the construction phase. The oil pipeline and refinery will provide an opportunity in the pre-construction and during the construction phase as millions of tons of equipment will have to be moved.

The roads and airport to be constructed will be done by private
companies. However, the long-term picture is what the two projects will do for logistics. Transport will improve with better roads. For instance, the road between Hoima and Wanseko Landing Site on the shores of Lake Albert will improve transport. Once the road is complete it will reduce the time transporters spend on the road from Kampala to West Nile. Through Wanseko, the ferry service by UNRA links West Nile in just less than two hours. With the airport, it means there is potential to set-up a logistics hub in an area like Hoima since they will have the entire necessary infrastructure.

This is only just a tip of the planned investment by the Uganda
Government in public infrastructure. The SGR – as already discussed in my previous post – is an opportunity not be missed. The construction of hydropower dams (Isimba – 183MW, Karuma – 600MW) – will ensure that there is enough power for cold-storage facilities at affordable rates than before.

Importantly though is how it boosts the private sector
and improves production and Increased production.

The ultimate ambition of the government is to ensure that there is
improved production in Uganda’s economy. The role of the government is to facilitate business growth. When roads are built, the output by producers is expected to grow and in turn improve the production
capacity of the country. If the dams constructed can improve access to energy at a much lower cost that would lower energy costs and lead to industrialization. The ripple effects would be felt by the logistics sector since industrialization results in the movement of goods.

From 17th to 18th September 2018, Uganda hosts the Global Logistics Convention themed “Freight Logistics: The Edge to Competitiveness”. And indeed one of the highlights will be pointing out the opportunities in the sector. The convention is supported by the United Kingdom’s Department for International Development (DFID), through Trademark East Africa (TMA). The conference is organised by Uganda Freight Forwarders Association (UFFA) and the National Logistics Platform at the Private Sector Foundation Uganda (Psfu)

Source Eagle

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.