Unfolding possibilities of Kenya’s Pre-2017 Election First Oil?
Possibilities are mounting that Kenya is on overdrive to have its first oil before the next general elections slated for August 2017. Speculation is rife, supported by all manner of actions, projects matrices and calculated demeanor of the various institutions and leadership. The 2017 general elections is going to be an interesting battle for extractives industry in Kenya and specifically in Petroleum Counties. A series of key infrastructure projects will be completed and the crude pipeline would probably be a deal to go into construction phase. The KPC has snapped KPRL, the SGR will be complete, so are strategic access roads provide key in and outlet logistics for development of both South Lokichar and Chepkutet trucked to Eldoret.
A post ICC rejuvenated Jubilee Government is set to take greater effort to take the battle to Cord Coalition in counties including Turkana, with an incumbency poised for another 5-year term. Some analysts say bi-polar politics is good for development phase extractives. They propose that extractives policies would be better expoused, alternatives debated building transparency and accountability in the foundational infrastructure. Going by Uganda last election, we would expect to see Turkana candidates for the governorship and county assembly majority in robust debates on petroleum. What amount of petroleum politics will seep into 2017 Kenyan elections?
The Standard Gauge Railway is completed by June 2016 and by the end of this year, the Government will begin importing 60 locomotive engines, 1,620 wagons and 40 passenger coaches ahead of 2017. The government through the Kenya Pipeline Corporation (KPC) has initiated the acquisition of the Kenya Petroleum Refineries Ltd (KPRL) facility in Mombasa to boost its storage potential. "Indeed, KPC is soon taking over KPRL after the Government of Kenya agreed to pay half a billion shillings owed to India’s Essar Energy, effectively acquiring Essar’s 50 per cent stake in the refinery. Through KPC, the Government intends to convert the refinery into a storage facility as the country gears up for commercial oil production"... ICES
South Lokichar Petroleum development project is also said to be in the advance stages for evacuating at least 2,000 barrels a day in truck trips to Eldoret from where special cargo trains to the KPRL refineries storage in Mombasa. The Mombasa routing of the crude pipeline could lead to disenchantment in LAPSSET counties who have historically been marginalised.
The political competition between the two coalitions is worth attention prior to the looming 2017 general elections. This is especially given the recent call by political leaders in "Turkana that they will not accept the development of the crude pipeline if the local content issues have not been clearly negotiated and defined".
Then there has also been talk of political mobilisation among certain political leaders in the northern and north eastern Kenya to jointly negotiate the development piece of the Kenyan Cake. The leaders — who include MPs, governors and senators from Isiolo, Mandera, Wajir, Garissa, Marsabit, Turkana, West Pokot, Baringo, Laikipia, Samburu, Tana River, Lamu, Kajiado and Narok counties — recently attended the Pastoralist Leadership Summit held at the Samburu Simba Lodge in Isiolo County and expressed their displeasure at the government.
Debate-able extractive related policy battle lines in coming 2017 general elections
An interesting battle will be the perception that the government has backed out of LAPSSET. Critical in the LAPSSET deal is the crude pipeline deal evacuating the crude petroleum recently discovered in South Lokichar and Baringo. Lamu Port south Sudan Ethiopia transport corridor when complete, will be the country's second transport corridor. The Kenyan President may have allayed these fears recently, when he is quoted to have said in the heat of Uganda pipeline negotiations, that "LAPSSET will continue even if Uganda decides to take the Tanga route to export its petroleum".
Kenya's other transport corridor is the Mombasa port and Mombasa–Uganda transport corridor that passes through Nairobi and much of the Northern Rift. According to wikipedia, the LAPSSET project will involve the following components: "A port at Manda Bay, Lamu; Standard gauge railway line to Juba and Addis Ababa, the South Sudanese and Ethiopian capital, Road network, Oil pipelines (Southern Sudan and Ethiopia), Oil refinery at Bargoni, Three airports, Three resort cities (Lamu, Isiolo and Lake Turkana shores)".
The proposed "Mombasa route" in the regional pipeline negotiations for the evacuation of crude pipeline as an alternative to the LAPSSET route has strongly been resisted by the northern communities as a clear indication of continued development marginalisation.
1. Proposed Community Land Bill: The land tenure systems in these counties and sub-regions of East Africa are communal in nature, are not formally recognised by the economic legislative structures that defined production systems. The communal land ownership comes with significant challenges to political leaders emerging in these communities to broker the transition to an inclusive resource driven future. There will be competitive political difference at community, county and maybe national level between the opposite political sides in interpretations of what is suitable in the character and components in the proposed community lands bill? The battle for votes in Turkana would easily be about community land rights and petroleum development? What political steps would the recent conservancies debate create?
2. Revenue sharing policies? the greatest fear for the 2017 first oil according to many especially in Turkana is the legislative grounds around which revenue sharing wold be done. The development of the production sharing contracts (PSC) for South Lokichar 10BB/13T blocks were signed prior to 2010 conditional creation of county governments. The petroleum production and the mining bills are yet to be legislated. What would be revenue sharing promises one political party wins as opposed to the other? Would Jubilee use this as a political carrot in the local political campaigns?
What kind of sub-national devolved revenue-sharing structures would be built in sub-counties with petroleum/mining infrastructure that is politicised outside the spirit of the constitution? How inclusive will the sub-national community development structures be in either case? How will a fractured elections shape their formation, transparency, governance and development records?
3. Local content policies: The LAPSSET counties consist of historically marginalised communities and which also happen to be found emerging extractive resources. According to some theories, the trajectory the East African region will take in the next 50 years depends on the development of the resources in these counties and sub-regions. What Manifesto positions would Jubilee and CORD stand for in their debates with and How would the contenders for Governors in these counties play their extractives and development party politics? What distribution methods would first oil carrots dangle to or actually deliver by either of the political opponents at the county or sub-county level?
1. Would political parties at least at the county level include any populilst policies they would wish to brand out there?
2. How inclusive would the sub-national politics within these counties vote or influence distribution of infrastructure local content social-economic benefits of petroleum/mining development?
3. What would be the companies views/positions on either of the policy options proposed by the political sides?
4. Environmental management policies; the promise of revenue will definitely overshadow the reality of potential environmental damage. Yet being mostly driven by a livestock economy which significantly contributes to their economy, the changes in environmental factors and the contribution of extractives development directly and indirectly affects the political destiny of these counties. What potential, real or mythical impacts will politicians use on either side of the divide to promote or propagate fear for or against development projects and policy strategies.
The trucks and rail transportation is borne to have significant environmental and social risks along the more populated route. The skew in environmental and social compensation is a fear in any Kenyan citizen, that the promise of employment is yet to completely mitigate. The enforcement of environmental laws are weak at the county level despite the establishment of a more devolved EMCA with County Environmental Committee.
5. Inter-governmental Coordination: large scale infrastructure has seen serious weaknesses in the constitutional requirement for "coordination between national and county government". Increase in double taxation, land registration, negotiation and compensation, permitting, community participation, local content development, ratification of natural resource project agreements are all areas wanting in information sharing, trust and capacity building the basic foundations for intergovernmental coordination.
The inclusive growth we are able to panel-beat from this maze could be a critical to promote sustainable development in Kenya and East African region, driven by the increasing investment growth from the attractive petroleum/mining resource finds.
These are personal views and due diligence is advised on any references made, for any purposes whatsoever.