Summary
- Since Tullow Oil found crude there six years ago, the London-listed company has funded a 40-bed referral hospital, school classrooms and dormitories, provided village water points graded roads, and paid for scholarships to generate goodwill.
- Seeing the potential benefits of oil, residents of the poorest of Kenya’s 47 counties now want the central government to make up for decades of neglect by ploughing nearly a third of expected oil revenues back into Turkana.
- The central government has other ideas.
- Parliament passed a draft bill in 2016 allocating 20 percent of any state oil revenue to local government and 10 percent to communities living where the crude was discovered, leaving 70 percent for the central government in Nairobi.
- But President Uhuru Kenyatta never signed the bill.
In the decades before oil was discovered in the northern Kenyan
region of Turkana South, 100,000 poor villagers living in arid scrubland
relied on a lone church-run health centre in Lokichar town for medical
help.
Since Tullow Oil found crude there six years ago,
the London-listed company has funded a 40-bed referral hospital, school
classrooms and dormitories, provided village water points graded roads,
and paid for scholarships to generate goodwill.
Seeing
the potential benefits of oil, residents of the poorest of Kenya’s 47
counties now want the central government to make up for decades of
neglect by ploughing nearly a third of expected oil revenues back into
Turkana.
The central government has other ideas.
Parliament passed a draft bill in 2016 allocating 20 percent of
any state oil revenue to local government and 10 percent to communities
living where the crude was discovered, leaving 70 percent for the
central government in Nairobi.
But President Uhuru
Kenyatta never signed the bill. A revised version due to be debated in
parliament this month cuts the regional government share to 15 percent,
with only 5 percent for local communities.
The
legislation must be passed before large-scale oil production can begin.
Kenyatta’s Jubilee Party, which controls 213 of parliament’s 349 seats,
is likely to back the revised law, but some of its lawmakers may break
ranks and side with the opposition pushing for more money for local
communities.
“Now that they have suffered for so long,
the revenue from oil must actually feed them, treat them and take their
children to school,” said Jubilee Party member James Lomenen, member of
parliament for Turkana South.
Lomenen plans to table an
amendment to the Petroleum Exploration, Development and Production Bill
to restore the 10 percent share to local communities.
It's our land
Residents
see the new terms as another slap in the face for Turkana, a vast
scrubland the size of Sri Lanka where most residents live in villages
without power or running water.
Joseph Nachar, a
village elder in Loktorio, which is close to one of Tullow’s wells, said
locals will oppose oil companies if they don’t get their 10 percent. He
vowed to vote against any representative who doesn’t fight for their
cut.
In 2013, demonstrators backed by local politicians
marched on drilling sites demanding jobs and other benefits, forcing
Tullow to halt work for two weeks. “We are the owners of the land where
they are getting oil,” said Nachar.
Local leaders say
the money will help make up for years of neglect in areas such as health
and education. Turkana’s literacy rate is just 20 percent, while the
national average is more than 70 percent.
The maternal
mortality rate in Kenya was 382 for every 100,000 live births in 2014,
but in Turkana it was above 1,000, the U.N. children’s fund (UNICEF)
said.
“We are starting from scratch,” said Jane Ajele, Turkana county’s executive committee member for health.
Nairobi officials argue that Turkana’s economy, which largely depends on livestock, cannot absorb a wave of cash.
“We
want them to prosper but if we see a pitfall somewhere, we have to
advise people,” said Andrew Kamau, principal secretary in the Ministry
of Energy and Petroleum.
Corruption scandals
Most
of Kenya’s oil blocks have not been explored. Those owned by Tullow and
its partners, Africa Oil Corp and Total SA, hold an estimated 750
million barrels.
While that’s less than African
frontier oil countries such as Uganda and Ghana, exports scheduled to
start in 2021 would earn the government $1.2 billion a year at peak
production at current prices, government officials say.
That’s about 10 percent of annual revenue, comparable to the country’s biggest export, tea.
The
petroleum bill would also create a sovereign wealth fund, financed with
oil revenues, which the government says it would manage to guard
against currency fluctuations and theft.
But Turkana
residents have little faith the government, tainted by a series of
corruption scandals, will manage their money well.
Kenya
loses a third of its state budget - the equivalent of about $6 billion -
to corruption every year, former anti-graft chief Philip Kinisu told
Reuters in 2016.
The government denied the figure and
Kinisu was fired five months after giving the interview. His successor
did not respond to requests for comment.
Auditor
General Edward Ouko has also accused the national government of
corruption and mismanagement in a series of scathing reports.
He
has been equally critical of county authorities, set up in 2013 to help
counter complaints about central government theft. About 20 percent of
Turkana’s 12 billion shilling ($119 million) budget in 2016 was
unaccounted for, Ouko’s office said.
“With the corruption that we have in Kenya, you can only trust what goes to the community directly,” said MP Lomenen.
‘Clock is ticking’
Tullow
has already spent 1.5 billion shillings ($15 million) on community
projects. But the row over revenue sharing has eaten into the oil
companies’ tight timelines.
“The clock is ticking,” said Tullow Oil Kenya country manager Martin Mbogo.
Technical studies of 40 wells in the Lokichar basin were due to start last year but have been delayed.
So
has early oil production, due to start last June. About 2,000 barrels
of crude were to be trucked out daily until an 800 km (500 mile)
pipeline is built to Indian Ocean ports.
Petroleum
ministry official Kamau said delegations including community
representatives would visit established producers such as Nigeria,
Canada and Oman to seek advice on revenue sharing.
In
Nigeria, 13 percent of oil revenue goes to local communities, though
that has not stopped attacks on oil installations by those wanting more.
The rest is shared out among the three tiers of the Nigerian
government; the federal branch gets 52 percent.
Expectations among the Turkana people are similarly high.
“They
should think about us because we are not getting any help at all,” said
Joshua Losepito, standing with his wife and daughter outside their hut
made of sticks and branches near Lokichar town.
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