AFKInsider: Local Policies Set Back East Africa Oil And Gas Projects

East Africa is set to emerge as a global supplier of oil and gas within the next decade due to the recent major oil and gas discoveries in Mozambique, Tanzania, Kenya and Uganda. Uganda and Kenya alone are estimated to hold 4 billion barrels of crude oil while Tanzania and Mozambique claim 200 trillion cubic feet of natural gas. With the promise of unprecedented petro-revenues possible, host governments are working on bold, detailed, and comprehensive local content policies as they eye the next phase: production.

These policies, though intended to boost the economic well-being of the local population and indigenous enterprises, may bear unexpected costs. In an environment characterized by lack of skilled labor and poor infrastructure, the timing of local content policies may negatively impact the project costs, quality of work and schedule.

Mozambique’s current local content legislation requires foreign contractors to contract local companies in procurement of goods and services, but there is no clarity as to what extent and percentage of jobs would be allocated to the citizenry. In Tanzania, local content policies are entrenched in the 2013 Production Sharing Agreement Model (PSAM) but are yet to be adopted into any effective petroleum contract.
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