Contract now specifies key benefits for residents in coal mining project

Kenya: Residents of the Mui coal basin are set to benefit from a raft of proposals that will be included as an addendum to the coal mining contract awarded to a Chinese firm, and which was signed in December last year. Just after the signing of the contract, there was an outcry from the locals that the deal  did not adequately address their interests. This prompted selection of a technical committee to re-look it and make proposed amendments. The feeling by the technical committee, which drafted the proposed amendments to the Benefits Sharing Agreement (BSA) to cater for the interests of the community in the mining deal, is that Fenxi has adopted more than 90 per cent of the proposed amendments.

The technical committee of 12 people was chaired by Kitui Senator David Musila, drawing members from the community's liaison committee, the Ministry of Energy and Petroleum and Kitui County Government.

The document, which is set to be signed by the Government and Fenxi Industry Mining Company, says the addendum shall take precedent over the already signed BSA as far as the amended clauses are concerned. "If any clause in the addendum is in conflict with any provisions of the BSA, then the provisions of the addendum shall prevail," it says.

Through a letter written to the Energy and Petroleum Cabinet Secretary Davis Chirchir, Yang Wusheng, who is Fenxi's vice chairman, says they have adopted the community's proposals "although there are areas that require that we all sit down and agree".

Notable in the document is that the concessionaire shall prioritise the recruitment of qualified, skilled and non-skilled persons from the local community, the county, Kenya and elsewhere in that order. "For avoidance of doubt, the local community, as defined in the BSA, refers to the development area," the addendum notes.

The document also gives the community an opportunity for shareholding in the mining company through purchase of equity in the coal project. The land owners will be paid 70 per cent of the compensation money while the remaining 30 per cent will be utilised towards purchase of equity in the coal project to be held by an entity owned by the local community.

The document says that after the expiry of the leasehold by the concessionaire to mine coal, the land will revert back to the County Government to be held in trust for the local community as community land. And as part of the transition of the coal development area into a post mining economy, one per cent of the gross revenue generated by the project will be set aside and invested as a fund for achieving alternative economic activities. According to the document, Fenxi will work with the Government and the local community to develop a Resettlement Action Plan that addresses the displacement of Mui residents who will be affected by the mining project and related activities.

A meeting held at the Kenya School of Monetary Studies on Monday, which was chaired by the Law Society of Kenya Chairman Eric Mutua in his capacity as the community's liaison committee chairman for Blocks C and D, hailed the document as the best part of the mining deal since it safeguards the community's interests and cushions them from exploitation by the investor.

 

The meeting was attended by the Energy and Petroleum Ministry officials, Kitui County Executive in charge of Environment, Energy and Mineral Investment Development George Mulatya, his Chief Officer Dr Muusya Mwinzi, members of the Kitui County Assembly Patricia Kisio (Kivou) and Musee Mulongo (Mui), as well as members of the liaison committee.

However, Fenxi has kicked off a storm by contracting Ecolife Consulting Limited to carry out a Strategic Environmental Assessment and Resettlement Action Plan, whose representatives have been in the coal belt for the last one week for this exercise.

The move has seen the liaison committee write to the Energy Cabinet Secretary in protest, saying the exercise goes against the terms of the addendum that stipulates that the process should involve the Government, the concessionaire and the community. "Resettlement and compensation affect lives fundamentally, and cannot be taken in such a casual manner. It is a matter of bad faith for the investor to take such steps without participation by all the parties," the letter dated July 18 and signed by Mr Mutua says.

Enziu Location Chief Joseph Musyoka told The Standard on Sunday that the residents of the coal belt were not against Ecolife Consulting Limited carrying out environmental and resettlement assessment in the area, but were jittery over the manner in which the process seemed to exclude their elected representatives. He said that at Isekele and Karung'a areas, the residents refused to fill the questionnaires, saying issues of survey and issuance of title deeds had not been addressed. "The exercise is important but it should be an all-inclusive affair lest people feel left out," Mr Musyoka said. Kitui County leaders are petitioning the Government to cede part of the $3 million paid by Fenxi to the Government as concession fees.The leaders say part of this money should be channeled to the County Government for development activities before the actual coal mining starts.