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Locals eye scraps as connected sharks hold onto petrodollars

By Vincent Achuka and Moses Michira | Oct 1st 2017 | 5 min read
Tullow crude oil. (Photo: Courtesy)

At Lavington Bar and Guest House in Lokichar town, revellers sit in in the open sipping smuggled beer from Uganda in the open on a dusty cloudless night. The air is dry, the temperature warm and the beers warmer.

The bar with a similar name to an upmarket neighbourhood in Nairobi best represents the aspirations the discovery of oil five years ago brought to this desert town. Outgoing men troop to have a drink every night, watch news on TV and talk politics on benches spread on a cracked cement floor.

“I am still new here so I can’t tell why the owner decided to name this place Lavington but he travels a lot, maybe he saw the name in one of his travels,” Sarah Nammazi, a waitress, responds when we ask about the name.

Elusive windfall

“But people love it here, especially those who are new like you. Today it is not even half as full as it normally is,” she says.

Nammazi, who hails from Karamoja in Uganda, is among the hundreds — if not thousands — who have in the last five years trooped to Lokichar in search of the windfall promised by the discovery of the black gold.

But five years since the then Energy Minister Kiraitu Murungi announced the discovery of oil at Ngamia 1, located in Lokichar, the town is yet to get its first bank.

A handful of M-Pesa shops is what the town has for financial transactions and the only visible business are lodgings and bars.

And while there has been a notable improvement in investment, especially in the hospitality sector with at least a dozen guest houses springing in the last few years, it is still way below what you would expect in an area sitting on a billion barrels of crude.

Oil exploration and production requires a very high skill-set, meaning that most of the services are procured from outside the rusty settlement.

This disparity between the dreams the oil find presented to its residents and the reality are best described by Adapal Nangiro’s homestead that is metres away from Ngamia 1, where Tullow announced it had struck oil on November 26, 2012.

A graveyard full of goats next to her house shows how a bad drought has wreaked havoc to an already poor neighbourhood.

“We get water from the company and they have made the roads better but it is still too little,” she complains.

At $58 per barrel according to Friday’s market price of crude, the bowels of Lokichar region have Sh5.8 trillion worth of crude, enough to fund Kenya’s national budget for three years without asking for a loan.

But at the Anglo-Irish company’s command centre in Lokichar, a brochure given to visitors paints a picture of roses.

Tullow says it paid Sh7.4 billion to local businesses for goods and services last year alone.

A further Sh15.2 billion was paid to international companies with local presence while Sh7.1 billion was paid to international companies not based in Kenya.

The payments are part of the estimated Sh200 billion that the company has incurred since coming to Kenya in 2010. Such spending should ordinarily impact the livelihoods of the host community, but only if they have the capacity to be suppliers.

Tullow says its procurement processes are above board in defending the rather tilted list of major suppliers.

“Our procurement system is very open and transparent. We put out an expression of interest, companies apply. There is due diligence done to make sure that those who come through are not politically exposed persons,” says its country manager Martin Mbogo.

“I can confidently say that we have done our due diligence and they are where they are because they merit to be where they are and not because of who they know in the government system. The majority of our local employees are employed by Tullow contractors such as KK Security, AFEX (a construction firm) and transporters,” said Mbogo.

Local staff

He added that most contractors have more than 80 per cent of their staff from within the local community. KK Security is a Canadian-owned firm but with a huge presence across the country and continent.

“We currently work with more than 200 local businesses which provide a range of goods and services such as transport and logistics, camp services, security and construction,” says the company in its brochure.

Among the biggest service providers for Tullow is a firm associated with a White House insider and international war contractor Eric Prince.

Prince, whose private military company Blackwater strained relations between the US and Iraq after its army opened fire on Iraqi civilians in 2007, first tried to get into Kenya’s oil sector by purchasing a 49 per cent stake at Kijipwa Aviation in 2014.

Prince paid Sh1.9 billion in cash and brought in 25 aircraft, but the Kenya government declined to renew Kijipwa’s licence that year. After losing that deal, Hong Kong-based Company Frontier Service Group where Prince is chairman, bought 49 per cent in Phoenix Aviation at Sh1.4 billion.

Tullow non-local staff who are given a weekend off once every two weeks use Phoenix Aviation’s planes for chartered flights. The company charges at least Sh612,000 to charter its eight-seater BE350 aircraft from Nairobi to Lokichar, according to insiders.

Another company that is swimming in Turkana’s oil billions is Transcentury, which is owned by former President Mwai Kibaki’s allies.

Kibaki was President in 2012 when the announcement on the discovery of oil was made.

Countless projects

Transcentury has a 60 per cent stake at Civicon, an engineering company whose contract was renewed for a further two years in 2016 to provide infrastructure for Tullow.

Civicon provides infrastructure like terminals for fuel storage and power plants for oil and gas firms.

An Eldoret-based firm known as Tai Enterprises has been contracted to take up most of the civil works since 2014.

Oil Field Movers too has its hands in the black gold jar by providing logistical support for Tullow since 2013.

Some local people say they feel marginalised despite Tullow’s statement that it provides jobs and engagement opportunities to local people when it can.

“They (Tullow) will not give you business. You have to force yourself in. Unless you are an activist or a warlord, you will not get any contract with them,” John Baraka, a local activist says.

 “It doesn’t not come easy. We blocked one of their rigs here for three days because we wanted local businessmen to get contracts as the company claims,” he says.

The company says it has done countless projects to benefit the community, most of which are done by local contractors.

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