More transparency needed in the oil sector

Last week Tullow Oil reported that one of its wells in Turkana, Ngamia-1 in block 10BB, had already begun producing 281 barrels per day following a drill test. With increasing evidence of the commercial viability of the wells comes the need to make sure that Kenya does not come under the “resource curse” like many of our neighbors in Africa.  For Kenyans to benefit from the oil find, we absolutely must get a few important things right. Top of the list is making sure there is a great deal of transparency in the regulation of the oil sector. Deals between the Government and the oil explorers, and eventual operators, have to be made public. Parliament must ensure that the Government gets the best deals for Kenyans. Africa is replete with examples of countries where resource wealth accrues to a few individuals at the expense of the public. Kenya must not join this list of countries.

If and when the wells in Turkana and other exploration sites become operational, a lot of investor money will flow into Kenya. If not managed well, the rapid inflow of cash might result in the “Dutch disease,” a case where foreign investment in the country increases the value of the Shilling so much that our commodity exporters become less competitive internationally. The last thing Kenya needs is for the oil discovery to cause a decline in our vibrant agricultural sector. On this score we can learn from Botswana and Norway, two countries that have been successful at using their resource wealth for the benefit of their people through sound policy. We need not look far for lessons on what not to do. Nigeria and Chad provide clear examples of how much resource wealth a country can lose due to corruption.