Turkana County should now start to build capacity

The compromise on oil revenue sharing reached between the national and the Turkana county government was a win-win milestone for the emergent upstream oil sector.

The national government will take 75 per cent of revenues, the county government 20 per cent and local communities 5 per cent.

The local communities were defined as the sub-counties in which the oilfields are located. The conditional capping for the county and community revenue shares was removed.

This will now allow the legislative work on the Petroleum Bill to be completed and pave the way for setting up of sector regulatory and institutional capacity necessary for the development and commercialisation of the oil reserves so that full exports via Lamu are realised by possibly 2022/23, the time when oil revenues will be expected to accrue.

With the local oil politics and conflicts now essentially simmered, it is time for the Turkana County to systematically and effectively integrate oil as one of the key county socio-economic sectors among others like livestock, fisheries, agriculture, mining and tourism.

The oilfields have a maximum life of 20-25 years. As such, oil should be seen by the county as a “transient” sector whose beneficial impacts on the county economy should be made to outlast the oil.

Even before oil revenues arrive, there will be plenty of economic activities happening in the construction of infrastructure for oil production and the export pipeline to Lamu.

Local capacity in the form of skills and enterprise are therefore immediately needed to allow Turkana people to either directly participate in these projects, or indirectly participate in tens of other indirect support services.

A number of initiatives by donors, NGOs, and investors to develop skills and enterprise capacity in Turkana have been ongoing.

However the Turkana County government should now proactively step up leadership and support for capacity building efforts to increase Turkana county share of these jobs and provision of services and materials.

The skills and enterprises should be as diverse and transferable as possible to allow application beyond oil and also beyond county boundaries.

Local economic participation is a very sensitive subject because, as was the case with oil revenue sharing, local content disputes can result in disruptive conflicts.

The county has to be proactive and prepare its people to understand their existing capacity and limitations, and also ongoing affirmative actions on local content.

Investor’s responsibility is usually limited to contracting for skills, services, and materials that meet basic standards. It is for the governments and diverse groups to ensure that these are available in the right quantity and quality.

If these are not locally available, the investors and their sub-contractors will seek them outside the county and country.

Now turning to capacity by Turkana county to absorb allocated oil revenue (a total of 25 per cent), the county government will need to firstly formulate “Turkana based” policy guidelines on how the oil money will be spent in the short, medium and long term. This will need to be a very inclusive all-stake-holders discussion preferably long before 2022/23.

READ: President Kenyatta flags off Kenya's first crude oil exports

Secondly, it will be the setting up of institutional and governance frameworks and systems at both County and Sub-county levels for accounting and spending the oil revenues.

Best practices on how local governments and communities have effectively utilized allocated oil revenues are available in countries like Indonesia, among others.

However it should be emphasized that Turkana County must develop systems to serve their unique needs. Turkana will be the “guinea pig” test case county for resource revenue management and as such they need to get it right first time.

Yes between now and 2022/23 Turkana County has a full agenda. The county will, on the subject of oil, need continuous positive engagement with investors, national government, and above all local communities.

In respect of local communities, correct information will need to be availed to minimize misconceptions, mistrust, and misplaced expectations.

Finally it is encouraging to learn that experts for production development and Lamu pipeline design have been identified, and that investor final investment decisions on the production and pipeline are possible by mid 2019, motivated of course by the ongoing firming up of global oil prices.