The government has launched an audit of the early oil pilot scheme to evaluate whether taxpayers are getting value out of the project.
The government has launched an audit of the early oil pilot scheme to evaluate whether taxpayers are getting value out of the multi-billion-shilling project.
The Petroleum and Mining ministry is looking for a consultant to audit the entire project to evaluate the cost, expenditure, production and related revenue dating back to March 2017.
“The objective will be to confirm the validity of the expenditures and the completeness of the revenue and production based on the terms of the agreement and the production sharing contracts of blocks 10BB and 13T,” said the ministry.
In August, Treasury indicated that the country had earned the first billion from its first batch of crude oil exports in what was hailed as a milestone.
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However, the high cost of exploration and logistics have cast doubt on whether the oil will deliver the expected revenue.
Tullow Oil estimates it has invested more than Sh200 billion in Kenya together with partners under its prospecting licence.
The government now wants to evaluate the project which includes production volumes from 10BB and 13T currently licensed to Tullow.
The audit also seeks to confirm that the income generated from the sale of the early oil pilot was accurately computed as well as the underlying risks and uncertainties.
This comes even as rating agency Moody’s downgraded Tullow Oil’s credit rating to B2 from B1 and probability of default rating to B2-PD from B1-PD.
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“The downgrade of Tullow’s ratings and change in outlook to negative reflect management’s recent downward revision of its forward-looking production guidance following a review of the production performance issues experienced by the group in 2019 and its implications for the longer-term outlook of the fields,” said Moody’s in its report.