A rig at Ngamia 1 where Tullow Oil Company is exploring oil in Turkana County. Tullow Oil Kenya on Sunday announced that it had suspended its operations due to the demonstrations by area residents demanding to be employed at the company’s sites. Photo/FILE
In Summary
An investor operating in rural Kenya must deal with multiple power-seekers and pretenders to power
Let us not forget that the national government has made a range of commitment to oil explorers
By Jaindi Kisero
More by this Author
Make no mistake, the problem the oil explorer, Tullow, is encountering in Northern Kenya is not a genuine rebellion by ordinary Turkana peasants agitating for a bigger share of the spoils. This whole thing is about manipulation of community politics by local oligarchs.
It is about devolution of corruption. It is a lesson about how local political elites in the supposedly oil-rich parts of Kenya are right now setting themselves up to extort rent from oil exploration firms.
I am a strong supporter of devolution, but I am opposed to devolution of economic policy-making. Indeed, Tullow’s predicament arises from failure by the national government to exert its authority to protect the obligations it signed when foreign investors came here.
Today, an investor operating in rural Kenya must deal with multiple power-seekers and pretenders to power — the Governor, the Senator, the County Representative — all of whom seek to be recognised as the authentic representatives of the people.
The elite in control of governments have made the investment climate unpredictable, operating as if they are oblivious to the damage they are causing.
EQUIPMENT STUCK IN MOMBASA
Here is another example. The other day, officials of a Canadian company exploring oil in North Eastern Province narrated to this writer how his firm had been preparing to start drilling, only to be stopped by the county government on grounds of looming tribal clashes between local communities.
The upshot is that hundreds of millions of shillings worth of drilling equipment imported from China has been stuck in Mombasa, accumulating hefty demurrage charges.
Trucks ferrying drilling equipment from Nairobi were turned away on orders of the local security committee. And the company has been knocking on the doors of one government office after another for intervention, to no avail.
It’s only last week that the Ministry of Energy sent a team to the area to assess the damage done.
The investor told me that the company was considering the option of entering what lawyers call force majeure — a legal term derived from French — in reference to a superior or irresistible power. It is an event caused by elements of nature, as opposed to one caused by human behaviour.
The tribulations the Canadians had surely had nothing to do with impending tribal clashes. It is all about political manipulation by the local oligarchs — the very same phenomenon playing out in Turkana.
Why so? Because the local MP had forced the Canadians to sign an agreement committing to pay millions of shillings to a trust fund ostensibly for financing projects within the constituency.
The local county government also wants the company to commit to a new revenue-sharing formula. A former MP wants the company to support a water project he patronises.
“They even want to decide for you who to hire and whose supporters they should not deal with,” the representative of the Canadian company said.
Mark you, all these demands are being made although the Canadians have not yet started drilling. What if they hit a dry well?
The case for sharing oil revenues with local communities cannot be gainsaid. I have argued before that with the advent of devolution, engagement with local communities will have to go beyond run-of-the-mill social responsibility projects — a primary school, bursary funds and dispensaries.
Under section 27, the Constitution requires that management of natural resource wealth be conducted in the interest of all Kenyans. County governments will have to get their fair share, but we must not forget that we are in competition with other countries.
We must have a fiscal regime that compares with other petroleum producing countries in the region.
Currently, the government is revising the fiscal regime for all extractive industries. Indeed, the existing regime for petroleum exploration and production was set way back in 1986.
As we seek to revise it, let us not forget that the national government has made a range of commitment to oil explorers, which include how revenues are to be shared. We must adhere to those obligations.
Where changes are necessary, let modifications be made by mutual consent.
No comments :
Post a Comment