New law hands oil-rich counties 25 percent of revenue

President Uhuru Kenyatta has signed into law a Bill outlining how oil revenues will be shared between the government and local communities.

Under the new Petroleum Act that has been in the works for over two years, the county government will enjoy 20 per cent of revenue from petroleum operations while five per cent will go to local communities living around the oil wells.

The national government will retain 75 per cent of the revenue.

This comes at a time Kenya has reached out to 18 global oil refinery firms in the quest to make the first sale of its crude oil in the second quarter of the year.

The new law is expected to especially pacify locals in Turkana County who last year paralysed the pilot oil evacuation for at least a month, citing the cutting of the county government share to 15 per cent.

Compensation to companies involved in the mining of the oil and its movement was estimated at Sh1 billion.

The share of the revenue that has been awarded to local communities is half the initial 10 per cent that had been passed by Parliament in 2016 but not signed by the President.

However, Parliament has been tasked with reviewing of percentages within 10 years to take into consideration any adjustments needed.

Also signed into law is the Urban Areas and Cities (Amendment) Bill 2017, and the Energy Bill 2017. Mr Kenyatta said operationalising the three laws will accelerate efficient and quality service delivery to the public.

The new urban areas and cities law will see county governments review the criteria for classifying an area as a city, a municipality, a town or a market centre. It cuts the number of the resident population required for an area to be classified as a city from 500,000 to 250,000 people.

Areas with at least 50,000, 10,000 and 2,000 residents will now qualify to be a municipality, a town and a market centre respectively.

The law also paves the way for establishment of boards to govern and manage cities and municipalities.