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Kenya’s crude oil export plan moves a step closer

Fred Aminga and Kirera Mwiti @PeopleDailyKe

Mining and Petroleum Cabinet Secretary John Munyes estimates that the closed Mombasa oil refinery will receive the first eight trucks of crude oil from Turkana County by May.

This will set the stage for export of Kenya’s crude oil to the international market for sampling and marketing as crude oil exploration continues in Lokichar.

However, Kenyans will still have to wait for Parliament’s nod to the Energy Bill, 2017 to continue implementation of the Early Oil Pilot Scheme (EOP), which is aimed at establishing enabling commercial, physical and logistical infrastructure that will facilitate full-fledged development and exportation of oil.

A Sh100 million crude oil early production facility has already been set up at Amosing in Turkana in readiness for the evacuation of the oil from all the fields.

A temporary equipment that will enable Tullow Oil to connect all 40 wells it has dug and thus achieve target of extracting 2,000 barrels of crude daily. Photo/FILE

“The issue of road network from Lokichar to Kitale has also been addressed and plans are underway to start ferrying some of the crude oil through road by May this year,” Munyes said at the Senate Committee on Energy retreat at Enashipai Spa and Resort in Naivasha.

Moves to submit reports to Parliament were in high gear over the weekend with a retreat for the committee and comments and recommendations on the Energy Bill, 2017 and Petroleum (Exploration, Development and Production) Bill 2017, being shared for consideration before submission.

During the meeting, Munyes ruled out proposals to construct a refinery in Lokichar, saying the government plans to construct a pipeline from Lokichar to Lamu in a multi-billion- shilling project that will be completed by 2021. He asked Turkana residents to support the government’s capital project, adding that Energy Bill had formulated how resources from the exploration would be channeled out.

“The national government will take 75 per cent of the proceeds while the rest will go to the grassroots through the county governments,” said the CS. While Turkana’s oil resources hold the promise of significant revenues, however, to ensure that the country gets optimal benefits from its petroleum resource endowment, the government needs to see through a set of reforms.

The main contentious issues in the Energy Bill is the revenue sharing arrangements between national government and the county governments. Turkana County government has been pushing for a 30 per cent share of oil revenues, while the government has been advocating for 20 per cent if this does not exceed their annual budget allocation from national government.

The national government has been proposing that the host community’s share is pegged at five per cent of revenue, while the county government has been proposing 10 per cent.

Main reasons around these disputes lie in national government arguing that the counties do not have the absorptive capacity to manage such funds and considerations that the resources, while presently having been discovered in Turkana, are essentially a national resource.

Meanwhile, local counties and communities argue that while this is a national resource, they deserve more of the share as they are likely to be disproportionately impacted in terms of land rights and other social disruptions.

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