Row brewing over how oil revenue from Turkana basin will be shared

Tuesday January 3 2017

Workers at an oil rig at Ngamia 1 in Kenya's Turkana County.  The government wants production to begin in 2017. PHOTO | FILE

Workers at an oil rig at Ngamia 1 in Kenya's Turkana County. PHOTO | FILE 


A battle over how oil revenue will be shared between Turkana County in northern Kenya and the national government is shaping up, after President Uhuru Kenyatta declined to assent to a Bill that spells out a resource-sharing formula.

The prospect of petrodollars had generated high expectations in the arid Turkana area with a push to maximise the benefits from the discovery of 750 million barrels of oil in the South Lokichar basin.

And now, Turkana leaders, led by Governor Josephat Nanok, have started agitating for increased allocation of the proceeds to the host community and the county government.

In a memorandum explaining the refusal to assent to the Petroleum Exploration and Development and Production Bill 2016, President Kenyatta pushed for reduced shares of oil revenues to the county government and the community.

The president, in a memorandum to the National Assembly and Senate, said the revenue due to the local communities should be reduced from the 10 per cent of what the national government gets as set by parliament, to 5 per cent.

“This amount should not exceed a quarter of the amount allocated to county government by parliament,” said the memo.

Turkana legislators had pushed for local communities’ share of oil revenues to be increased from 5 per cent to 10 per cent when the Bill was debated.

The Turkana MPs pushed for 20 per cent share reducing national government’s portion from 85 per cent to 70 per cent.

President Kenyatta maintained percentage of revenues due to county governments where oil is found to 20 per cent, but put a caveat that the money will not be more than twice amount allocated by parliament in a financial year.

“Unless the shares of the petroleum revenues reserved to county governments are capped, the implementation of the (percentages set by Parliament) shall pose the challenge of the inequitable distribution of resources and the risk that county governments and local communities shall receive disproportionately higher allocations that might be beyond their absorption capacities,” the president said in the memo.

Governor Nanok is pushing for a 30 per cent share from oil revenues to reverse years of marginalisation of Turkana by successive governments.

“The memorandum violates the rights of Turkana as far as equitable share of natural resources is concerned. The alleged inability to manage own resources and affairs is equated to legalising theft of our resources,” he said during a meeting of community leaders on December 7, 2016.

“If the president and parliament ignore our plea, the early oil pilot project will be derailed as we will stop all oil exploration and exploitation,” he added.

The Turkana County government in early December tried to get copies of the production sharing contracts that Tullow Oil Plc signed with Ministry of Energy to no avail.

The memo on the rejection of the Petroleum Bill will now be scrutinised by the Energy Committee in the National Assembly and its counterpart in the Senate before consideration by both Houses.

In the National Assembly and Senate, legislators opposed to the memo have to get a two-thirds majority to overturn it.

President Kenyatta sought to strengthen Parliament’s power over contracts and agreements signed on exploration of oil with sharing of documents once production starts.

Lawmakers had proposed that the Cabinet Secretary submit to parliament production sharing contracts for ratification in accordance with Article 71 of the Constitution.

But President Kenyatta said it would also be important for the field development plan to be also submitted to Parliament for scrutiny.

He directed that the field development plan and the production sharing contract be submitted to parliament for ratification within 30 days of approval by both the exploration firms and the Ministry of Energy.

Parliament would then be required to make its decision within 90 days, without which it would be considered to have been ratified.