7 February 2018

Kenya: New Bill Cuts Locals' Share of Oil Revenue

The government has withdrawn its offer of 10 per cent share of oil revenue to host communities, and now proposes that they get five per cent.

State's share will, however, not exceed a quarter of the amount allocated to the county government by Parliament in the financial year.

These proposals are contained in the latest version of the Petroleum (Exploration, Development and Production) Bill published on December 6 and set to be debated when the National Assembly resumes sittings next week.

The proposed law is sponsored by Majority Leader Aden Duale.

This is the third version of the Bill initially published in the last Parliament but which lapsed and was republished in September, taken through the First Reading before Mr Duale withdrew it together with the Energy Bill.

He said the Bill had been withdrawn because it contained typographical errors while some sections had been left out when the proposed legislations were republished.

Besides setting out how the revenue from the oil would be shared, the proposed law also provides for how contracts would be scrutinised and approved as well as how the firms involved should go about their business.

EXPLORATION

Its approval by Parliament -- the National Assembly and the Senate -- and eventual enactment is seen as one of the steps to starting the exploitation of the reserves located in Turkana and Kerio Valley.

The politically-charged debate on the sharing of oil revenue played out in the run-up to the August 8 election at a rally in Turkana in March last year, with President Kenyatta losing his cool as he spoke on the matter.

The decision to reduce the revenue due to the local community is not likely to go down well with MPs from Turkana County, who had rallied their colleagues in the last Parliament to double the amount.

Also likely to stir up trouble is the proposed capping of revenues due to a county.

While the Bill maintains the amount due to a county at 20 per cent of the national government's share, it places a cap on that, saying: "Provided that the amount allocated... shall not exceed the amount allocated to the county government by Parliament in the financial year under consideration."

This means that if a county government has been allocated Sh10 billion in a financial year, its share of the oil revenues would not exceed Sh10 billion and the community's share should not be more than Sh2.5 billion.

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