In the recent past, Turkana residents have been pushing for a raise in the allocation of the oil share through their leader Josphat Nanok. They needed the raise to 10% saying the 5% suggested was inadequate. The concession came after MPs in the National Assembly’s Energy Committee approved the requested 10% in the Petroleum Bill.
The allocation is contained in the Petroleum (Exploration, Development and Production) Bill 2017 that is before the National Assembly, which President Kenyatta refused to assent to, demanding the share to be reduced to 5%.
Things have now changed as President Uhuru Kenyatta announced that the production of oil from the Turkana oilfields will start without any hindrance after an agreement was reached on the sharing of revenue, despite the plea by Turkana residents. President Uhuru said the revenue from oil will be shared on the basis of 75% for all Kenyans through the National Government, 20% to the county government and 5% will go to the local community.
This has resulted in a multiple of questions if not loop holes as some issues have not been spelt out clearly. Well, 5% is to go to the local community that would be directly affected by the oil extraction process. When they say local community directly affected, who do they really mean? How do we ensure that the 5% will not end up being used for services/ projects that are supposed to be covered by the county /national government like what we have in the CDF or what is happening in Baringo and the gate collections from Lake Bogoria? This will further drive the discussion on what the community expects as per now. For example in the case of Turkana where community members are already seeing direct cash transfers to their accounts. I don’t disagree with the model, however it means that by the time the oil will become absolute, then that would mark the end of their benefit.
Aside from that, we also need to dig deeper and understand exactly what the 5% is for. What will count as the shareable revenue, because as we speak there is revenue already being generated from the ongoing explorations. We need to also make sure that the share set aside for the county and community will be appropriated to ensure utilization otherwise it will be stuck like in the Titanium revenue case in Kwale.
As it is, not only the host community would be directly affected by the oil extraction process, there are communities who will be displaced to pave way for either the road, pipeline or railway line that are to be constructed for the oil transportation. All these communities across the country would in the same way be affected, is the 5% going to all these communities or is it just set aside for the host community?
Even if it would go to all/either of these communities, is it enough to cater for their livelihood changes? Aside from that, how is it going to be spent, in order to ensure that the communities are actually going to benefit? Is there a person or a body set aside specifically to oversee the spenditure of the said amount?
Looking at the proposed formation of trust funds for the community share in the petroleum bill, how is this process going to take shape? How will the management structure look like? Who will be in the decision making positions and how will the decisions be made? Is there an oil producing country that has applied similar actions, if yes, could we seek to benchmark? These are some of the questions originating from the said oil sharing agreement.
How can this trust be connected to the local content debate? As it is the local content bill is implemented in countries with natural resources like oil and gas, in efforts to create jobs, spur local industries and take the ‘Dutch Disease’. What safety nets do we need to put in place to ensure it does not turn out to be another cash cow like the ‘NYS scandal, now that the local content bill is still shelved?
Choosing to look at it from a different angle, how will the formation of the trust funds be linked to the community land management committee as envisioned in the new community land regulation? In absence of these trust funds, we know the county governments will be the custodian of the resources, but what are the safety nets to ensure that this money will be spent rightly?
There is hence the need for communities to start engaging in the discussion of how they’d want sustainable development from these resource revenues. We need to ensure that all the resource rents collected are not used for recurrent budget to ensure that the revenue is translated to sustainable development that will cover this generation and the others to come. In other words there is still more to be discussed aside from what the president and Nanok are purporting to be a done deal by.