Content plan

It is important to have a local content plan when bidding for oil and gas contracts

Oil companies have long expressed a desire to have local businesses involved in the supply of goods and services.

Several oil experts say it is cheaper and more logical to use companies that are on the ground than foreign entities that can have huge profit margins.

However, at the April oil and gas convention in Kampala, oil companies expressed dissatisfaction with how companies were losing supply contracts due to tendering shortcomings.

The idea of ​​using local companies fits well with the national content strategy with an aspiration to retain at least 40% ($6 billion) of the $15 billion investment in the oil sector.

Developing the capacity of local companies to supply the oil and gas sector is one of the main objectives of the National Oil and Gas Policy 2018.

So far, 16 categories of goods and services, including transportation, security, food and beverage, accommodation and catering, human resource management, office supplies, fuel supply and l surveying, are reserved for local businesses.

Others are clearing and hauling, crane hire, locally available construction materials, civil works, supply of locally available drilling and production materials, environmental studies and impact assessment, communication and information technology services and waste management services.

This discussion can indeed be linked to Total Energies’ supply plan for the third and fourth quarters, which lists the services available through open and selective tendering.

The plan largely falls under third-tier contracts, where the majority of Ugandans are involved.

While the idea is to involve more Ugandans, there are a number of gaps that are blocking local businesses.

In a report recently published by the Uganda Chamber of Mines and Petroleum, Ms. Pamela Alinda, head of contracts and purchases at Total Energies, discusses at length the issues and lessons learned from calls for tenders.

Unfortunately, she says, many companies miss vital information even when requirements are well structured and communicated as instructions to bidders.

Most of the time, Alinda says, attendees are rushed to meet deadlines, causing them to skip important information.

Quite often, submissions are classified as inadequate or insufficient if they lack information or respond entirely differently to the issues that have been raised.

It is also noted that there is a lack of proactive engagement from bidders during the process, but “the more one engages, the sooner they understand the contractor’s scopes and needs.

It was also observed that there is a missing link between how participants understand the scope and how they structure the methodology on how to do the job.

“Companies are technically driven, so they focus on understanding the technical aspects, but miss out on national content, which is ideally the heart of Total Energies,” says Alinda.

For example, Total Energies requires bids to illustrate how they intend to benefit communities and build capacity programs for posterity.

All of these, she says, are straightforward processes if one takes the trouble to understand the technical, safety, social, biodiversity and health aspects of national content.

“These aspects should already be prepared by all potential participants and preparing them in advance would save a lot of time during the process,” she says.

The details do not change significantly and if prepared in advance and only tailored to meet a particular auction, it would save a lot of time.

Filing tax returns on time and meeting social security requirements are other challenges that participants must comply with at all times.

Many local companies have placed bids that leave something to be desired in terms of capacity and domestic content requirement.

However, Alinda notes that it is important for these companies to view joint ventures as vehicles through which they can increase capacity and meet the domestic content requirement.

“The industry is high end in terms of value, so even a company that has been in the industry for a while will need that boost. Establishing those relationships earlier will go a long way in building capacity” , she says.

He also pointed out that having a dedicated team of bid management personnel who understand how to mount bids would increase a company’s chances of winning bids.

While it is seen as a given that a company goes for the lowest bid, this may not be entirely true as there are other considerations such as maximizing domestic content.

To illustrate this, says Alinda, if there are two online bids for attribution and one of them has a higher national content score, plan and engagement, but the price difference is around 5%, the one with the high domestic content score will be more desirable.

Therefore, maximizing national content remains a joint effort, but as Alinda says, careful consideration should be given to every aspect of the bid, as they are all important.

Georgina Kirabo, a senior partner at PwC, in an expert analysis on companies that win oil contracts, notes that every company looking to win a tender or retain a contract must integrate domestic content into its business. , as this contributes to a meaningful score when evaluating bids.

Companies, she said, should prepare a national content plan in time and should not wait for tenders and bids to be announced.

“The national content plan should address aspects such as the number of Ugandans you employ, the number of Ugandans in the management team, training and internship opportunities for new graduates, as well as research,” notes Kirabo.

According to Ma Pexin, the vice president of CNOOC, companies that fail in tenders should avoid including the submission of generic tender responses that do not correspond to the answers to the questions posed.

Proposals, he said at the oil and gas convention, must be separated, especially with regard to price, from the unpriced business proposal

In addition, submission proposals should be completed and submitted on time with supporting details and where some information is unclear, one should not assume, but seek clarification.

It is also important that the rules are followed while avoiding lobbying during the tender.