POWER POINT PRESENTATION BY H.E. AMBASSADOR TOMUSANGE AT N.H.O. – NORWAY ON 31 MARCH 2011

CONTENTS OF THE PRESENTATION 1.MAP OF AFRICA 2.MAP OF UGANDA 3.MAP OF THE OIL FIELDS 4.WHAT IS THE ”LOCAL CONTENT”? 5.OBJECTIVES 6.OPPORTUNITIESS 7.CHALLENGES 8.PROPOSED SOLUTIONS 9.INCENTIVES 10.CONCLUSION

4 16.UGANDA TODAY AND TOMORROW NATIONAL VISION Vision 2025 “ Prosperous People, Harmonious Nation, Beautiful Country.” Poverty Reduction Strategy Country Paper (PRSCP) Poverty Eradication Action Plan (PEAP) Target: By 2017 Poverty will have been reduced to less than 10% Private Sector Led Economy

-EXPLORATION AREAS 1,2 AND 3 PETROLEUM EXPLORATION AND PRODUCTION DEPT., UGANDA

WHAT IS THE “LOCAL CONTENT”? A.THE PERCENTAGE OF COMPONENTS OF A PRODUCT WHICH IS MANUFACTURED, MANPOWER AND SERVICES. B.IN CASE OF OIL, THE LOCAL CONTENT COULD BE ALLOCATED TO INDIGENOUS COMAPNIES AND PEOPLE. -EXPLORATION -DRILLING -PLATFORM, REFINERY AND PIPELINE CONSTRUCTION. -PETROCHEMICAL INDUSTRIES -MARKETING PROCESS -ADMINISTRATION OVERHEADS. -PROVISION OF SERVICES

5. OBJECTIVES 1.PROTECT THE WELFARE OF THE PEOPLE 2.INCREASE THE SOCIAL BENFITS 3.MANAGE THE SOCIAL IMPACT OF THE INVESTMENT 4.INCLUDE/INCREASE INDIGENOUS PARTICIPATION 5.PROMOTE VALUE ADDITION 6.PROMOTE BUNESSS LINKAGES 7.BUILD CAPACITY 8.DEVELOPMENT OF FUNDING SYSTEMS.

6. OPPORTUNITIES 1.JOB CREATION 2.INFRASTRUCTURE DEVELOPMENT 3.SOCIAL INVESTMENT 4.INCOME GENERATION/POVERTY REDUCTION 5.SKILL DEVELOPMENT/VOCATIONAL TRAINING 6.LOW SOURCING COSTS 7.SUSTAINABLE IMPACT ON LOCAL ECONOMY

7. CHALLENGES 1. DEBT SERVICING 2. MISMANAGEMENT OF REVENUE/CORRUPTION 3. REVENUE SPENT ON RECURENT EXPENDITURE 4. LIMITED REVENUE IS INVESTED IN PRODUCTIVE INVESTMENT 5. DEATH OF JOBS AND LOW SKILL DEVELOPMENT 6. LOW CAPACITY 7. WEAK PUBLIC SYSTEMS AN INSTITUTIONS 8. REPARTRIATION OF INVESTMENT 9. THEREFORE OIL REVENUE NOT TRANSFORMED INTO GROWTH.

8. PROPOSED SOLUTIONS 1. LOCATION OF INVESTMENT IN THE HOST COUNTRY 2. FOCUS ON JOBS AND CAPACITY BUILDING 3. WORK TOWARDS VALUE ADDTION 4. HELP TO MITIGATE THE CRIPPLING SOCIAL SERVICES (HEALTH EDUCATION) 5. RE-INVEST IN DOWN STREAM INDUSTRIES (ENERGY, REFINERY, PETROCHEMICAL INDUSTRIES) 6. FOCUS ON THE LOCAL CONTENT OBJECTIVES.

WHAT HAS THE GOVERNMENT DONE? 9. ATTRACTIVE CURRENT INCENTIVE REGIME A. CAPITAL ALLOWANCE  INITIAL ALLOWANCE ON PLANT AND MACHINERY LOCATED IN KAMPALA, ENTEBBE AND JINJA50%  INITIAL ALLOWANCE ON PLANT AND MACHINERY LOCATED OUTSIDE KAMPALA, ENTEBBE AND JINJA75%  START UP COSTS SPREAD OVER THE FIRST 4 YEARS 25%  SCIENTIFIC RESEARCH EXPENDITURE100%  TRAINING EXPENDITURE100%  MINERAL EXPLORATION EXPENDITURE100 %

B. EXTERNALIZATION OF FUNDS  LOAN REPAYMENT IN A FOREIGN COUNTRY  PAYMENT OF FINANCIAL EARNINGS TO FOREIGN PERSONNEL  PAYMENT OF ROYALTIES OR FEES  PAYMENT OF PROFITS AND PROCEEDS ON DISPOSABLE ASSETS  INVESTMENT TRADER:  REFUNDS OF INPUT (VAT)  GENERATOR AND FUEL FOR THE GENERATOR  IMPORTED INPUTS  MANUFACTURE UNDER BOND  SPECIAL INCENTIVE FOR THE AVIATION SECTOR.

C. DEDUCTIBLE ANNUAL ALLOWANCES (DEPRECIABLE ASSESTS)  COMPUTERS AND DATA HANDLING EQUIPMENT40%  AUTOMOBILES, CONSTRUCTION AND EARTH MOVING EQUIPMENT35%  BUSES, GOODS VEHICLES, TRACTOR TRAILERS, PLANT AND MACHINERY FOR FARMING, MANUFACTURING AND MINING30%  RAILROAD CARS, LOCOMOTIVES, VESSELS, OFFICE FURNITURE AND FIXTURES20%

D. OTHER ANNUAL DEPRECIATION ALLOWANCES INDUSTRIAL BUILDINGS HOTELS AND HOSPITALS5% FARMING – GENERAL FARMWORK20% IMPORT DUTY EXEMPTION DUTY DRAWBACK FACILITIES FIRST ARRIVAL PRIVILEDGES CORPORATION TAX30%

10. CONCLUSION THE PRINCIPLES THE LAW ON ”LOCAL CONTENT” PENALTIES SUPPORT BY THE GOVENMENT OF NORWAY THANK YOU