BY Tioko Ekiru Emmanuel
The discovery of commercially viable oil in Ngamia-1, Block 10 in northern Kenya is a boon the country in realisation of the much anticipated Vision 2030, which is projected to elevate the country into a newly industrialising, middle-income economy. Additionally, the discovery was espoused as an opportunity to heal the scars of historical stigmatisation, marginalisation and side-lining of the Turkana community by successive regimes.
Having had the worst of ethnic domination and exclusion, the discovery was seen as a light at the end of a tunnel; regrettably, it seems to be an oncoming train.
The Constitution of Kenya is indeed a post-radical charter. It endeavours to engineer the country to a futuristic state where the entire citizenry is part and parcel of nation building. The sui-generis Constitution has the enviable quality of steering the populace and the country as a whole through the notoriety of previous regimes, plagued with tyrannical tendencies, and it holds the collective promise of new polity.
Admittedly, there have been impressive milestones made upon the promulgation of new the Constitution more so on the social, economic and political fronts. This has been informed by the injection of devolution into the architecture and the design of our governance system. Lamentably, the ghosts of the past have come to haunt us and are clamouring to return us to the pre-2010 tomb.
The Petroleum (2017) Amendment Bill, which deals with the intricate oil sharing formula involving the national and county government and the prospectors is a colossal conspiracy and a mockery of unparalleled proportions aimed at disenfranchising Turkana residents. The Bill has fuelled fears and laid the grounds for internal and localised conflicts between the Turkana and the State. It’s worth mentioning that the benefits accruing from the oil discovery is a very well-kept secret.
Residents are in the dark and are not party to the negotiations with regard to how the populace in the region will benefit from the Black Gold. It had been previously proposed that the host community would get 10% of the sharable proceeds, 20% kept for the county government, and the remainder channelled to the national government as “equitable share of taxes”. It then emerged that some conniving legislators are working in cahoots with the respective stakeholders to cap the monies of the locals to 5%.
In October 2016, the President flatly refused to assent to the Bill and appealed to the lawmakers to reduce the share of revenue allocated to the host community by half. He further issued directives that county allocations be capped to the equivalent of the county’s annual budget.
Expectedly, this elicited a fierce verbal exchange between Governor Josphat Nanok and the Head of State at a public forum.
Indeed, if the current bill fails to proffer a lucid sharing formula, the country would likely be retracing its steps to the dark days of our past.
Historically, the Turkana have been some of the most marginalised regions in Kenya’s developmental space. The community has been classified as being within the constitutional definitional parameters of marginalised communities because of their relative geographic isolation, and have consequently been left out in the marginal participation in terms of integrated social and economic life in the country.
In addition, a report conducted by Commission on Revenue Allocation (CRA) titled, “The survey on marginalized areas/counties in Kenya” ranked Turkana as the least developed county amongst the 47. The degree of poverty in the County was projected at 93.4%, higher than the national rate.
In many other aspects, surveys have revealed that places where natural resources occur, especially oil deposits, are prone to insecurity and conflicts. Turkana region also shares similar attribute due to intense inter-communal conflicts and sporadic raids. It is reported that between 2006 and 2009, there were average of 71 raids in a year.
According to J Schilling, the existence of inter-communal conflict is likely to be a catalyst for the resource-driven “curse phenomenon”. He suggests that concerted efforts should be made by the various stakeholders to curb these alarming conflicts. Truth be told, if the government does not review the purported legislations on oil sharing, then the “oil curse” will most likely happen.
Philip Le Billion in his commentary, “Wars and plunder: conflicts, profit, and the politics of Resources”, laments that benefit sharing is crucial in any natural resource exploitation place, and that it is never surprising that local communities express the need to be included so as to reap in the benefits on what their land offers or produces.
Valentine Ataka, in her work “Impact Benefit Sharing Agreements (IBAs) as an Answer to Tullow-Turkana Woes”, suggests that conflict in the oil and gas sector is preventable if the parties are ready to make certain sacrifices and commitments. Further, she proposes that impact-benefits agreements can be a medium to quell conflict in the sense that they provide a form of social acceptance to the oil company, and at the same time allow the community to hold the company to terms with binding obligations for community improvement.
The Constitution of Kenya defines public land to include land upon which minerals and oil are found. It also has comprehensive values, standards and principles that provide a suitable environment for the country’s development. Accordingly, in order to attain an equitable society, the state plays the role of implementing these principles even in the arena of natural resource sharing. The Turkana people have natural rights over their oil-rich ancestral land which must never be taken away just because the Constitution declares that land upon which oil has been discovered is public land.
The right of the Turkana to a higher percentage in the benefit sharing formulae is an expression of their natural rights over their ancestral property. Failure of the government to ensure they enjoy a higher percentage of the benefits gives them a right to revolt against the government for abrogating their natural rights over inalienable property.
Uwafiokun Idemudia, in his article “The quest for effective use of natural resource revenue in Africa: Beyond transparency and the need for compatible cultural democracy in Nigeria”, contends that the oil curse can be transformed into a blessing if oil-rich African states embraced oil-revenue management systems based on “transparency, accountability and fairness”. To ensure accountability, the author advocates for the adoption of a compatible cultural democracy in Africa, which entails “a co-societal arrangement, that is, the use of ethnic groups, nationalities, and communities as the constituencies for representation.
It would be both centralised and decentralised…..with emphasis on communal rights”. He emphasizes the importance of Ubuntu in creating the ideal environment for public participation, accountability and transparency in the natural resource management in resource-rich African states.
In contrast, Jeremiah Dibua, in his essay, “Citizenship and resource control in Nigeria: The case of minority communities in the Niger Delta”, makes the case that “The marginalisation of the minority rights in oil producing communities requires the community’s strong agitation for what they are entitled to.
He brings out the history of the Ogoni people who have been marginalised economically despite their occupation of the land upon which the bulk of Nigeria’s oil revenue has been derived throughout the years. Further, he strongly suggests that the principle of derivation “is seen as the primary vehicle through which the people from whose resources wealth is generated would exercise control over a significant portion of that wealth.
Nature of proceeds sharing
The benefits from oil proceeds that the local communities are entitled to are diverse in nature, but the principal aim is to ensure the indigenous or the host communities, from whence the resource is extracted, have significantly improved living standards.
The Natural Resource-sharing Bill highlights that the indigenous local community can benefit from both aspects of monetary and non-monetary oil proceeds sharing. It defines non-monetary benefit as integrating project benefits which are supposed to enhance community development and improve living standards.
In ensuring redistribution of benefits accruing from oil extraction, various methods have been put in place i.e. local ownership, community ownership funds, indirect social benefits, and direct distribution benefits of the general public, as well as spinoff economic benefits.
The Act clearly stipulates that monetary benefits entail partial distribution of monetary flows generated by operationalising the infrastructure project among the affected communities through the following: revenue distribution, property taxes, preferential rates and equity sharing/full ownership, and development funds.
Benefit sharing is crucial for a number of reasons. One, it promotes positive attitudes towards the exploration and management of natural resources. Two, it is geared towards the promotion of partnerships, incentives and benefit sharing to enhance the development and management of natural resources. Three, it provides a legal and institutional framework for a cost and benefit sharing formula.
Four, it facilitates environmental conservation and resource sharing for the current and future generations. Five, it enhances the reduction of pressure on natural resources by providing employment opportunities for communities by using resources more professionally and proficiently.
Lastly, it promotes capacity building by relevant stakeholders so as they can engage in sustainable management of ecosystem, leading to increased food security.
Equitable benefits sharing
Christabel Nyamweya argues that equity is based on two principles: public trust doctrine and principle of permanent sovereignty over natural resources. The first principle connotes the right to environmental and natural resources. The second has to do with access, and the right of commons to conservation and promotion of natural resources.
Equity is a derivative of social justice. It symbolizes a belief that there are some things which people ought to have, that there are basic needs that should be satisfied, that burdens and rewards should not spread too divergently across the community and policy should be directed with impartiality, fairness and justice towards these ends.
Equitable benefit sharing is the activity of maintaining the equal rights of all classes of people, ethnic groups and gender in society, with access to air, water and food required for the life process or natural resources, including forests, rivers, streams and land and the services obtained from them, which are necessary for their livelihood.
It also means the sharing of benefits received from these resources and provision of services based on certain limitations and standards.
Sovereign wealth fund
Sovereign fund is administered and managed by the Sovereign Board Fund, which is made up of secretaries in charge of Mining, Trade, Finance and Energy. The wealth fund is divided into two categories –the natural resources funds and the future funds.
The theory of sustainable development advocates for intergenerational equity.
This principle was advanced by Aguis in his book, “Future Generations and international Law” as the principal for ordering mankind, which will make it possible for every generation, by the ability of its own effort and responsibility, to secure proportionate share.
The aim of the fund is to ensure that resource proceeds are sustained for both present and future generations. The fund shall be administered and managed in a manner provided for in the public Finance Management Act, 2012.
A further objective of the fund is to support government saving from mineral revenues to ensure sustainable and stable future incomes, provide stabilisation support in times of economic stress, support the republic’s long-term financial position, and to finance expenditure on pensions.
Norway has been best ranked as leading in the practice of inter-generational equity. The country has utilised revenue from oil by purchasing prime real estate from other jurisdictions as a measure of sustaining the infinite of oil revenue for the purpose of promoting the inter-generational equity.
In its case, the fund requires 20% of all tax revenue received by the national government as a result of resource exploitation of oil proceeds to constitute the Sovereign Wealth Fund.
Corporate Social Responsibility
CSR is a charitable donation that cannot be legislated. Multinationals in the extractive industry determine unilaterally the amount of money and the projects they deem necessary to invest for the purpose of uplifting local communities.
Nevertheless, various social initiatives rarely progress beyond narrow philanthropic indications, such as donations of items such as school learning textbooks, mosquito nets or life jackets to local communities without any attempt to consult the community on priority projects. Most such attempts are mere PR gimmicks meant to hoodwink.
Moreover, it has been argued that CSR initiatives are shrewd methods used by multinational extractive industrial companies (MEIC) to blackmail indigenous local communities. To buttress this argument, it has been proven that MEICs use a meagre percentage of their profits to appease the indigenous people.
Lisa Calvano argues that CSR has been used as a manipulation instrument by MEIC’s to oppress local communities where petroleum is extracted. Additionally, Dr Duncan Ojwang, in his thought-provoking work on “Converging Ubuntu principles with Corporate Social Responsibility to extend corporate benefits to communities”, opines, “the basic principle of CSR, as currently is defined, is a mere-non binding corporate ‘charity’. It is a non-binding venture, which means it does not address exploitative practices…”
“To add insult to injury,” he says, “MIECs are not legally bound to provide proceeds to the indigenous communities; they are only persuaded to do so to obtain and retain a social contractual license for their continued operation.”
CSR should not be an avenue to dupe communities, but rather a mechanism to elevate and improve their livelihoods through capacity-building.
Principle of derivation
The principles of derivation and of need are two main philosophies governing benefit-sharing of resources accrued from natural resources exploitation. The target communities ought to receive allocations from the central pool in strict proportion to their contribution into the pool.
The philosophical underpinning here is that the communities within the area from where the natural resource is being exploited must have suffered in some way or another in terms of external costs, over and above the rest of citizens. Such external costs are usually manifested in form of things like pollution, disruption of social and economic life, and other undesirable consequences.
However, the implementation of benefit-sharing through this principle raises one fundamental question, what informs the allocation of the pre-determined figures, and not another set of figures? This is an issue worth exploring, even as it is conceded that some countries have adopted this principle to implement their benefit-sharing policies, including Bolivia, Brazil, Indonesia, Nigeria, Mexico, Papua New Guinea and Ghana.
Principle of need
This principle is anchored on the fact that benefits accrued from natural resources are distributed based upon the need of the community which is targeted. The community according to this principle is entitled to have a direct proportionality in line with their social and economic needs. Unlike the derivative principle, this principle takes cognisance of the unique and peculiar needs of the targeted group.
In the context of Kenya, the Turkana community is supposed to benefit from resource sharing proceeds as result of their unique and peculiar aspect of historical marginalisation and exclusion from the governmental space.
The fundamental significance of this principle is that it is a more suitable mechanism to check against possible waste and/or underfunding and has been applied in Botswana in the diamond proceeds sharing mechanism.
Overview of legal and institutional
The suitability of international conventions is wired upon the constitutional demands of Article 2(5) and (6) of the Constitution of Kenya (CoK), which requires that any law ratified in Kenya automatically forms part of the country corpus laws. The Constitution has broad provisions relating to environment and natural resources. Some of these important provisions can be pointed out to include those on ownership of natural and mineral resources, equitable benefit-sharing and public participation.
Article 62(1)(f) and (3) outlines ownership of minerals and mineral oil, crucially; Article 63(1) and 2(d)(iii) about community lands; Article 69(1)(a) on benefit-sharing, Article 69(1) affirms public participation, Article 69(1) (h) on utilising environmental and natural resources for the benefit of all citizens, Article 42(a) decrees protection of the environment, Article 35(1)(a) articulates the right to information held by the state, and Article 10 (2)(b) and (c) elucidates on national values and principles of governance.
The CoK outlines the principles of land policy and provides that land in Kenya must be held, used and managed in a manner that is equitable, efficient, productive, sustainable, and in accordance with the principles of equitable access to land; security of land rights; sustainable and productive management of land resources; transparent and cost effective administration of land; sound conservation and protection of ecologically sensitive areas; elimination of gender discrimination in law, custom, practices related to land and property; and encouragement of communities to settle land disputes through recognised local community initiatives consistent with the Constitution.
The petroleum (Exploration, Development and production) Amendment Bill, 2017
This Bill is set to be re-introduced in the national Assembly pursuant to Standing Order 140 of the House. On August 25, 2016, the National Assembly passed the Petroleum (Exploration, Development and production) Bill No.44 of 2015 together with Energy Bill No 50 of 2015. When the Bill was presented to the President for assent, however, he returned it to Parliament for reconsideration.
The referral of the two Bills was as expression of reservation to clauses 51, 58 and 85 of the petroleum Bill relating to the production, sharing, contracts and functions and objects of the agency.
Clause 85 on sharing of petroleum proceeds presents the bone of contention, and has ignited the misunderstanding between the national government and the local community. It proposes that the oil sharing formula to be apportioned between the National and County governments, and the local community. It also proclaims that the County Government’s share shall be equivalent to 20% of the National Government’s, provided that the amount allocated shall not exceed twice the amount allocated to the County Government by the National Government; the community shall get 10%.
The contentious issue about this Bill is that there is a clear back-door attempt at capping the proposed 10% for the community by half. This is a mockery of the Turkana people, taking into account the longstanding marginalization they have undergone. The current proposed formula where the community gets 5% should not be allowed to pass. It is a constitutional exploitation of indigenous people’s rights!
The Mining Act of 2016 outlines accruing benefits – financial and other benefits – to which communities where minerals are extracted are entitled. The 2009 African mining vision accurately points out that the benefits to the local community may come in various forms including revenues apportioned to the community because of its location (property rates and land rents); benefits which are the community’s share of central government revenues from mining, non-income benefits such as employment for local residents; assistance to community health and educational institutions, and access to the use of mine infrastructure by the general public, among others.
Natural Resources (Benefit Sharing Bill) 2015
The proposed legislation seeks to establish a system of benefits-sharing in resource exploitation between resource exploiters, the national and county governments and local communities, to establish the natural resource benefit sharing authority and for connected purposes.
The Act applies in respect to petroleum and natural gas, among other natural resources. Further, it outlines guiding principles to include transparency and inclusivity, revenue maximisation and adequacy, efficiency and equity and accountability. The legislation seeks to set up a Benefit Sharing Authority which will be mandated to coordinate the preparation of benefit sharing agreement between local communities and affected organisations, review and where appropriate determine the royalties payable to an affected organisation engaged in natural resource exploitation, identify counties that require to enter into benefit sharing agreement for the commercial exploitation of natural resource within the counties oversee the administration of funds set out for county projects as identified and determined under and benefit sharing agreement, monitor the implementation of any benefit sharing agreement entered between a county and an affected organisation, conduct research regarding exploitation and development of natural resources and benefit sharing in Kenya recommend on better exploitation of natural resources in Kenya, and determine appeals arising from conflict relating to natural resource benefit sharing.
There is need of concerted efforts of ensuring that the community is part of resource management and not bystanders. Community should actively participate in all process.
The Mining Bill, 2013
The draft mining Bill marks a major departure thus: under it, all unextracted minerals on any land are vested in the government subject to any rights the government may have granted, making it an offence for any person to deal with minerals without authorization.
The Bill introduces the aspect of public trust, effectively imposing a fiduciary responsibility on the part of the state. In terms of royalties sharing, it proposes that communities to be offered 20% of the mining royalties paid by companies undertaking the commercial production of minerals across the country. The Bill is primarily expected to quell heated mistrust between the mining companies and local communities on sharing proceeds accrued from minerals. The Bill introduces radical changes such that it addresses the issues of past mistreatment, where communities used to get nothing, and suggest rates better than the 5% proposed on the oil proceeds.
Petroleum (Exploration and production) Act, cap 308
It is the principal legislation that deals with the upstream petroleum activities in Kenya. Its primary objective is to regulate the exploration and production of petroleum products in the country. The Act governs explorations works and production of oil, and provides a framework that regulates the granting of licenses, allocation of exploration blocks to oil companies as well as negotiation and conclusion of Production Sharing Contracts (PSC) with potential investors.
Under the Act, the Minister in charge of Energy has been given powers to determine the grant of license to companies and to carry out negotiations with the different stakeholders in the petroleum sector as the chief government representative. Such license, if granted, does not allow the prospector to mine any other minerals or other natural resources (other than petroleum) in that area. Section 11 of the Act outlines benefit sharing, but there are glaring loopholes.
First are constraints in terms of funds usage. Section 11(4) of the Act restricts the funds provided for training purposes only, meaning they cannot be used in other social and economic welfare avenues in the community; as such, impacts are untenable to the expected standards.
Further, Section 11(5) of the Act demands the amount to be contributed into training funds shall be specified in the petroleum agreement. Additionally, Section 5(1) of the Act empowers the cabinet secretary to negotiate, enter into and sign agreements on behalf of government. The nature attributed by Section 5(1) is to make payment of training contribution a discretionary exercise, with regards to the negotiation outcome.
Suffice it to say that the Act has not specified the exact amounts for training; the silence is likely to cause immense flaws to fund operations. In order to address this mischief, it has been proposed that the Act should prescribe the minimum payment for each petroleum agreement in the training funds, which will help restrain the CS from misusing his mandate when negotiating on behalf of the government while utilizing the imprecise law.
Moreover, Section 11(3) vests absolute control of funds to the CS, which stipulates that, all withdrawals to be conducted upon ministerial authorization. A close scrutiny of this section suggests the fund operates at the CS’s whims, which is not convenient to members of the public, especially those expected to benefit from the Fund.
For the purpose of ensuring that local livelihoods are at equal level of footing with the rest of general public in social, economic and political aspects the training opportunities should be apportioned proportionally as opposed to equally. It is also arguable that clear sharing formula need to be redefined and the funds independently monitored by members of the communities where resources are accrued.
County Government Act, 2012
The Act provides for citizen participation, which includes but is not limited to protection and promotion of the interests and rights of minorities, marginalised communities and their access to relevant information, and where pertinent, for communities to appeal from or review decisions or redress grievances, with particular emphasis on disadvantaged persons and communities.
The devolved system of Government stands out as an architectural foundation in the Constitution upon which special interests are to be accorded representation. The system has the capacity to ensure effective public sector management, stable economic policies, and effective resource mobilisation and effective use of public resources. It is confirmatory therefore that the county government has a crucial role to play.
The National Sovereign Wealth Fund Bill, 2014
This is a legislation that is proposed to facilitate establishment of Kenya’s National Sovereign Wealth Fund to undertake diversified portfolio of medium and long term local and foreign investment to build a saving base for purpose of national development, stabilisation of the economy at all times, enhance interregional equity in the country, to give effect the provisions of Article 201 of CoK for connected purposes.
The object and purpose of the fund is to build a saving base for the people of Kenya; protect and stabilise the budget and economy from excess volatility in revenue or exports, provide a mechanism for diversification from non-renewable commodity exports, assist monetary authorities dissipate unwanted liquidity, increase savings for future generations, fund social and economic development, enhance sustainable long term capital growth, and support and promote any other strategic objectives.
Land (Amendment) Act 2016
The new development in this regime is the concept of compulsory acquisition of land (eminent domain) which operates within the contemplation of Article 40 of the Constitution.
The Act demands the compensation on land taken by government by the National Land commission only after final survey and determination of the acreage, boundaries and ownership and value of the land. In addition the commission is empowered by the Act, after investigating any historical land injustices, to recommend the following remedies – restitution, compensation, resettlement to an alternative land, rehabilitation through provision of social infrastructure, affirmative action for marginalised groups and communities, creation of wayleaves and easement, order for revocation and reallocation of land, sale and sharing of proceeds, declaratory and preservation orders including injunctions.
The Community Land Act, 2016
The Act is geared toward enforcement of Article 63(5) of the Constitution, to facilitate the recognition, protection and registration of community land rights; management and registration of community land; to provide for the role of the County Government in relation to unregistered community land and for connected purposes.
The law also proclaims that an agreement relating to investment in community land should be made after a free, open consultative process and should contain provisions on, among others, payment of compensation and royalties, and a requirement to rehabilitate the land upon completion or abandonment of the project, as well as matters necessary for determining how local communities will benefit from investments in their land. It must be noted that the clear intention of this provision, if fully implemented, will play a crucial role in impacting the local communities where resources are exploited positively, communities need proper sensitization to facilitate benefits and sustain resources within their locales.
The discovery of oil in Turkana County six years ago was seen as an opportune moment in redressing the past historical marginalisation, discrimination and repressive rule that had been perpetuated against the community.
However, there is a calculated move to re-marginalise this region, an idea that flies in the face of the constitution, and national values. Being among the people left behind in the Kenyan dream for eons, there is need to put appropriate legislative measures in place to cure the pertinent problems afflicting the locals, including perpetual insecurity, the potential adverse effects of oil exploration and the looming resource curse phenomena, among many others.
Failure to lay down a comprehensive framework and favourable policies to govern sharing of oil benefit is an invitation to conflicts with the government, the oil company (Tullow) and the local people. Turkana County, and other northern frontier Districts such as Mandera, Garissa, Isiolo and Wajir, must never again be left out of the Kenyan dream of prosperity in this post-2010 era. The vigorous attempt to take these regions back to the gory ghost of yesteryears is an irreconcilable mockery to the northerners.(