Kenya Says May Give 20% of Oil Royalties to Nearby Communities

Kenya is studying giving at least a fifth of oil and gas royalties to people living in areas where the resources are pumped, an Energy Ministry official said.

The ministry proposed guaranteeing 5 percent of royalties going to the communities and another 15 percent to local county governments, Petroleum Commissioner Martin Heya said.

“It would not affect the share negotiated by a company,” Heya said in an interview today in Nairobi.

The East African nation is seeking funds from donors such as the World Bank to update its 25-year-old Petroleum Act after U.K.-based Tullow Oil Plc (TLW) and Canadian partner Africa Oil Corp. (AOI) in March found the country’s first oil, in the Turkana region. The oil and gas proposals would mirror draft revisions to the mining law to share revenue from mineral production, Heya said.

Any proposal to change Kenyan legislation must be debated by “stakeholders” and backed by a vote in parliament, he said.

Heya discussed the idea on the weekend at a meeting with the community of northwestern Turkana, bordered by South Sudan, Uganda and Ethiopia and the poorest of Kenya’s 47 counties. About 95 percent of Turkana’s 855,399 people, who are mainly livestock farmers, live in poverty, according to a December report by the country’s Commission on Revenue Allocation.

“There are going to be enough resources to fast-track development in Turkana,” Heya said. “People want a predictable regime for commercialization, so they set their expectations in advance and we will provide that.” Once commercial viability of a deposit is verified, it will take a minimum of three years to five years to begin pumping crude in Kenya, he said.

To contact the reporter on this story: Sarah McGregor in Nairobi at smcgregor5@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.