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Sh1.2 billion export deal welcome but do more to avoid the oil curse

By The Standard | August 3rd 2019

The government announced on Thursday that it would finally be exporting the first batch of crude oil produced from Turkana County. This is a bold step in moving forward the nascent sector, which is expected to lead to commercial oil production by 2022.

While it is worth celebrating, a lot remains to be done. As the country implements the Early Oil Pilot Scheme and takes up lessons while identifying possible minefields along the road to being an oil producer, it is perhaps time Kenya considered setting up structures on how proceeds earned from oil will be utilised.

The government has set in motion the process of coming up with legal framework, largely seen in the Sovereign Wealth Bill which proposes how the oil billions will be invested for the benefit of current as well as future generations.

The Bill was published early this year but, unfortunately, there is little progress. In the absence of such a law, chances are high that the money from the oil resource will go to waste or worse be lost to corruption.

While it might be argued that there’s enough time to debate and pass the bill as well as set up institutions necessary before Kenya becomes an oil exporter, interests by different stakeholders could be an impediment.

This was the case with the Petroleum Act, which has been in the making for years and only became law five months ago. It has a formula on how communities and government will share revenue but is yet to be implemented through setting up of institutions to oversee the sharing.

We urge the government to be open and honest, which is one of the cures for the oil curse. On planned exports, the State says the 200,000 barrels would earn Kenya Sh1.3 billion, but remains silent as to who will buy the oil or where it is destined.

This has been characteristic of the many dealings in the oilsector, even in instances where it is of interest to the public to know what happens within the confines of boardrooms.

To date, eight years after Tullow and partners announced oildiscovery in Lokichar, few people know the content of the agreements it had with the State. Such opaqueness, suffice to say, opens up opportunities for underhand deals.


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