Finally, Kenya settles row over oil revenue

An oil rig in Turkana. Kenya has settled on a new formula in the sharing of oil cash. FILE PHOTO | NATION 

In Summary

• The national government will now get 70 pc, Turkana County government 20pc and the local community 10pc.
• Government backed down from its earlier push for the local community to get 5pc and the national government 75pc.
• Cash will be paid into a trust fund managed by a board of trustees by the county government in consultation with the local community.

By NJIRAINI MUCHIRA
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Kenya has settled on a new formula in the sharing of crude oil revenue thereby clearing the way for smallscale crude exportation under the early oil pilot scheme.

The national government will now get 70 per cent, Turkana County government 20 per cent and the local community 10 per cent.
The government agreed to the formula and backed down from its earlier push for the local community to get five per cent and the national government 75 per cent after the Council of Governors (CoG) united in pushing for 10 per cent for locals.

In its memorandum to the Energy Committee of Parliament, the CoG was categorical that it wanted the allocation for locals set at 10 per cent.

The cash will be paid into a trust fund managed by a board of trustees by the county government in consultation with the local community.
It also sought deletion of the provision capping revenue allocated to local communities to not exceed a quarter of the amount allocated to the county.

“The governors pushed for 10 per cent which, if well managed, will have a huge impact on the communities in Turkana,” said Fatma Nyambura, Adam Smith International assistant manager.

The CoG prompted the Energy Committee to propose amendments to the contentious clause in the Petroleum (Exploration, Development and Production) Bill, 2017 to increase the share of the local community to 10 per cent.

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Crude exportation

The Bill, which has been one of the major roadblocks to Kenya’s plans to start crude exportation from the oilfields in Lokichar, is now back in Parliament. It’s expected that President Uhuru Kenyatta will assent to it.
“The Petroleum Bill is a parliamentary process and we are awaiting the conclusion of the process so that we can start the EOPS,” Andrew Kamau, Petroleum Principal Secretary, told The EastAfrican.

Resolution of the controversial revenue sharing standoff will allow transportation of crude from Lokichar to Mombasa.

“Discussions between local and national government are ongoing with expectations of being able commence the trucking of oil in the coming months,” said the firm in its latest trading update.

The company, which is pushing for crude exportation in order to start recouping its investments, added that it has been storing crude in tanks in Turkana awaiting all the necessary approvals before its starts transferring the crude oil to Mombasa by road.

Tullow Oil has in store about 60,000 barrels ready to be transported to Mombasa for storage at the Kenya Petroleum Refinery Limited storage tanks before gathering sufficient quantities for exportation.

The firm is also on the process of installing an early product facility to enable it extract crude oil from the ground. The equipment being installed by Dubai based-El Mansoura Petroleum will enable Tullow to connect all 40 wells it has dug and thus achieve the targets of extracting 2,000 barrels of crude every day when the EOPS commences.