Kenya oil export plans should not be rushed

Image Source: The East African

Reports that Kenya is set to roll out small-scale oil exports only raise more questions on the country’s readiness.

The Energy and Petroleum ministry had suspended export plans in June, two months before the August 8 General Election.

It said then that it had shelved plans to export 2,000 barrels per day following stakeholder consultations.

The ministry now says that the new initiative is aimed at testing the receptivity of the Turkana crude oil in the global market, pending construction of infrastructure for huge volume of exports.

The government expects to move between 2,000 and 4,000 barrels of oil daily by trucks from Turkana to the Port of Mombasa.

We opine that oil exports should not be hurried, especially for political expediency. The onus is on the government to first ensure that it has the proper infrastructure like pipelines in place.

While shelving the plan in June, the ministry had said that the export plan would only take off once the Petroleum Bill 2015 had been enacted.

The Bill is still stuck at the Senate after the President sought to reduce the revenue share meant for the local community from 10 per cent to five per cent.

The Bill entitles county governments with crude deposits to 20 per cent of the state revenues from the oil.

The proposed law also provides for the creation of a sovereign wealth fund, a government-owned investment vehicle that aims to hold at least five per cent of the revenues.

Oil exports should only happen when there is ready infrastructure and when they are likely to yield the country maximum benefit. For example, neighbouring Uganda has not yet stated exports yet it discovered the resource earlier than us.

We urge officials not to rush the export plan if all appropriate measures are not in place.

The country needs long-term preparations that will ensure that current and future generations benefit from the oil. That is the only way we can avoid the resource curse that has engulfed many countries.

Source: Business Daily


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