Money Markets
By George Omondi
In Summary
- Experts see the proposal to hand communities a slice of such capital intensive infrastructure as one way of defusing tension and reducing resistance towards disruptive public projects.
Land owners in northern Kenya have been invited to
own part of the proposed Lokichar-Lamu oil pipeline in a move aimed at
defusing tensions over compensation for the land taken up by the
project.
President Uhuru Kenyatta yesterday asked Turkana County
residents to consider converting their land into equity stake in the
pipeline which is expected to be ready by 2019. The pipeline will be
used to transport the crude oil discovered in the county to Lamu port
for export.
“Invest in the pipeline so that you have revenue
that will help the community for a long time instead of asking for an
upfront payment. You can do this by contributing land as shares instead
of selling it,” President Kenyatta told a delegation from Turkana County
that paid him a courtesy call at State House, Nairobi.
The delegation led by Senate Speaker Ekwe Ethuro,
Turkana Governor Josphat Nanok and Senator John Munyes promised to
consult the community with a view to ensure it took advantage of the
opportunity.
The proposal marks the first time that the
government has come out openly to promote the largely untested idea of
using land for equity stake in public infrastructure projects. It would
mean landowners choose between compensation in cash or shares in the
pipeline for portions of their land taken up by the wayleave.
“We neither have precedence nor a legal framework
to guide exchange of land for equity stakes but I think this is an
innovative proposal that deserves serious thought,” said Mr Ibrahim
Mwathane, chairman of the Land Development and Governance Institute.
The government has previously being forced to pay
millions of shillings to land owners as market value for lands acquired
compulsorily for public projects. A number of projects envisaged under
Vision 2030 are expected to extend over large swathes of community
lands.
Last week, Transport and Infrastructure secretary
Michael Kamau said at least 11,000 acres of land will be acquired
compulsorily for the standard gauge railway project.
The Lokichar-Lamu crude oil pipeline is part of the
Sh2.6 trillion Lamu Port Southern Sudan-Ethiopia Transport (Lappset)
Corridor project that Kenya plans to build in partnership with the
private sector.
Apart from the crude oil pipeline, which runs from
Uganda to Lamu, Lappset’s other components include resort cities,
airports, roads and railway lines. The project will see the state
acquire thousands of acres of land in counties like Turkana, Isiolo,
Samburu, Marsabit, Garissa and Lamu.
If communities accept to exchange their land for
equity, they will only be receiving dividends on interest (shares) held,
enabling the state to channel all the available cash to project
development. State House sees the proposal as one way of ending a
stalemate over compensation for land, which has been cited as a
stumbling block that holds back mega infrastructure projects.
“Don’t make announcements concerning development
without bringing local communities on board because that is where
suspicion starts,” President Kenyatta said.
Opinion is divided on the profitability of various
public projects and their ability to sustain profitable returns over a
long period of time. Experts, however, see the proposal to hand
communities a slice of such capital intensive infrastructure as one way
of defusing tension and reducing resistance towards disruptive public
projects.
“I expect that the same way entities make
agreements with communities to pay for their land, they can have pacts
that guarantee individuals stakes equivalent to the shilling value of
the piece of land surrendered for the project,” said Mr Mwathane.
At the State House meeting, Energy secretary Davis
Chirchir said the government would soon advertise for a lead consultant
for feasibility studies for the pipeline.
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