Make tight oil sector laws to benefit local people
Posted Sunday, October 28 2012 at 16:56
- Article 71 of the Constitution provides that transactions involving the grants of rights or concessions for exploitation of any natural resource would be subject to ratification by Parliament.
- The fifth schedule of the Constitution provides that a law on agreements related to natural resources be published by 2015. This law when published, will definitely be one of the legislation to be considered by would be investors in the oil and energy sector.
The energy sector in East Africa is growing at a tremendous rate and many investors in energy are eyeing East Africa.
Tanzania is endowed with natural gas, oil was discovered in Uganda where production is expected to start in Hoima District.
In Kenya wind power and discovery of oil resources in Turkana County are putting the country on the global map as a destination for investment in the energy sector.
There have been a number of investments in the energy sector, including takeovers, mergers and acquisitions by firms that want to take advantage of this opportunity.
All these discoveries are coming at a very timely season for Kenya and the region as the UN General Assembly in 2010, declared 2012 as the year of sustainable energy for all.
Increased investment in the energy sector means a lot for Kenya and other East Africa economies.
The projects would spur economic development in the local communities in terms of infrastructure, power supply and social amenities like education and health.
Energy projects would also create jobs opportunities.
Significant production of oil and gas would boost the gross domestic product for the region.
The East African Community would experience greater competency in the energy sector due to transfer of skills from the investors to the locals.
However, oil discovery and production could also come with certain pitfalls, which should be well mitigated in advance. Studies have shown that discovery and exploitation of natural resources have negative impacts on the environment.
If not well handled there would be some level of environmental degradation, which may reduce the financial gains from the resource.
A long standing debate has been how to achieve the right balance between environmental conservation and financial benefits from exploitation of natural resources. The practice is that before a licence for exploitation can be granted, regulatory approval from the relevant environmental authority must be sought and issued, otherwise it would be illegal to undertake the venture.
Overall, the impact of oil discovery would be positive. Perhaps one reason for the increased attention to East Africa by investors in the energy sector is because the region has been previously untapped in as far as oil and gas production is concerned.
The Oil Producing and Exporting Countries enjoy a near monopoly. In West Africa, the sector is saturated with competitors. East Africa is an emerging market as far as production is concerned.