Local Content Bill to give Kenyans more oil cash
Posted on :Friday , 23rd September 2016
Oil and gas companies will now be required to state how local communities will benefit from the proceeds before they are licenced if a proposed bill becomes law.
The bill by Baringo Senator Gideon Moi seeks to ensure the companies do not take off with everything after drilling oil and tapping gas. The Local Content Bill 2016 will also put an end to conflicts that have rocked communities in oil and gas rich areas and these companies by ensuring the millions of poor Kenyans are assured of greater benefits.
Moi, who is also the chairman of the Senate Energy Committee, says in the preamble the proposed law that the bill will ensure minerals do not become a curse to local communities as has been the case in most oil producing nations in Africa.
“The bill will also ensure the local oil and gas industry is protected so it can compete fairly with multinationals,” Moi said. This came just months before Kenya produces its first barrel of crude oil in Turkana.
There has been no law spelling out how locals would benefit from the resource which is why Moi’s bill is seen as timely.
Some of the the African countries where oil has been more of a curse than a blessing include Nigeria. Sudan and South Sudan has also been fighting for control oil rich Abyei region on the border of the two countries. In Nigeria, oil has benefited only a few people which has led into frequent conflicts between communities as well with oil companies.
“How can Kenya properly leverage these resources for the republic and all her citizens to fully reap the benefits of the oil discovery?” asks Moi.
Thus, oil and gas exploration companies will henceforth be required to submit documents detailing how proceeds will be shared with local communities in an effort to protect interests of those living in areas rich in these minerals.
The law will also require international mining companies to commit to a skills and technology transfer agreement with local firms and individuals. This will ensure more Kenyans are employable by acquiring the necessary skills. Technology transfer will also increase job opportunities.
“While there is certainly great potential in transforming the natural resources into prosperity for all Kenyans, it will remain only a potential unless Kenyans themselves begin to realise the value of these resources,” reads the bill in part. Kenya has several blocks of natural gas and oil spanning several counties. However, most of these counties are poor, including Turkana, which is known to have the most promising oil fields that could be exploited as soon as June next year.
Lamu and Wajir have natural gas. The bill, if passed, will change the fortunes of millions of ordinary Kenyans in these areas.
Lately, there have been increased exploration activities in the country after more oil was also discovered in North Eastern.
The Senate Standing Committee on Energy in conjunction with Strathmore University’s Extractives Industry Centre will hold a public debate at the institution tomorrow to enhance understanding of the Bill.
Mwambi Mwikamba, the Kenya National Resources Alliance (Kenra) executive director termed the bill as the most progressive yet in ensuring benefits accrued from oil and gas exploration benefit local communities as well.
“It is the best law that has been drafted for the extractive sector,” Mwikamba said yesterday ahead of today’s presentation of the Bill before the Senate. His organisation has been educating communities on the how to gain from the mining of natural resources in their areas. “We would be glad if the proposed law is enacted as it will benefit poor citizens who would ordinarily be left out of the drilling and explorations processes,” Mwikamba added.
Last week, British company Tullow Oil announced it will begin exportation in June 2017 after making good progress on the Early Oil Pilot Scheme.
“Tullow remains confident that the South Lokichar basin has the potential for growth from the current 750 million barrels to around one billion barrels of oil,” the company’s chief executive officer Paul McDade said.
The oil will be transported by road from Lokichar in Turkana County to Mombasa where it will be exported with an initial 2,000 barrels set to be produced per day. Tullow is set to further boost production with an additional eight new wells in South Lokichar basin.
Mining company, Kenrock Limited, recently applied for a special license to prospect Gypsum in Garissa County in a move that could significantly raise income for the marginalised region. The company intends to explore the mineral, key in the manufacture of cement, across a 300 km square land. The application by Kenrock is the latest by a mining company in search of new gypsum deposits as demand from Kenya’s growing real estate sector exerts pressures on the raw material.
Data from the Kenya National Bureau of Statistics hows Kenya used 4.2 million tonnes of cement in 2013 compared to two million used in 2008.
“The timing for oil, gas and other mineral resources was God-sent. The resources were discovered at a time Kenya and her people needed them most to accelerate the country’s economic take off,” states Moi. Moi’s will enhance ownership, control and financing connected with the exploitation of gas, oil and other mineral by local communities. Data from global think tank Brookings Institute shows recent discoveries of oil and gas in East Africa could be transform the region if well managed.
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