Kenya Civil Society Platform on Oil and Gas Co-ordinator Charles Wanguhu.
The secretive nature of deals signed between and companies prospecting for minerals, oil and natural gas in Kenya could be exposing the country to major losses in future.
A local civil society group yesterday warned some of the firms have been getting concessions in the contracts, with the Ministries of Energy and Mining exercising discretion that might see the country get a raw deal during the commercial production phase.
The Kenya Civil Society Platform on Oil and Gas (KCSPOG) said despite the country having started to export different minerals including gold and titanium as well as getting closer to being an oil exporter, there is no clarity on how the country will share revenues with the firms.
The organisation now wants the Government to make the contracts open for scrutiny and also see the extent to which Kenya will benefit from its resources.
Companies exploring for such resources as minerals, oil and gas sign Public Sharing Contracts (PSC) with the respective Cabinet Secretaries, with most of the resources falling within the Ministries of Mining and Energy.
Key within these contracts are revenue-sharing mechanisms between the Government and the companies once commercial production of the resources begins. The contracts also set out requirements for the companies that include the minimum investments that the firm is required to undertake per year or during a contract period. Most of the agreements have, however, been confidential. KCSPOG Co-ordinator Charles Wanguhu said the organisation had written to Mining and Energy and Petroleum Cabinet Secretaries, requesting for the contracts with mining and oil and gas companies operating in the country.
“There is need to ascertain whether we are signing good deals,” said Mr Wanguhu at a press briefing in Nairobi. There has been debate about what proportion of revenues should from oil should go the national and county governments as well as host communities.
“The challenge is that we do not know how much will be left for the country after the production companies have taken their share. Such a revenue split is contained in the contracts that have remained confidential.”
The Energy and Petroleum Ministry has signed 44 public sharing contracts with over 20 firms that have been prospecting for oil and gas in the country. Out of these, only 10 contracts are publicly available, which is mostly due to regulatory requirements in the countries they are headquartered in. “A big anomaly in the disclosure mechanisms is that companies disclose in their home countries. However, no Kenyan obligation exists for similar disclosure even in instances where the rights to the block are owned by a Kenyan entity,” said Mr Wanguhu.
He added that a review of the publicly available contract showed that the Energy Ministry had exercised discretion and exempted some of the companies from certain requirements like the payment of a signing bonus on entry into Kenya, while such bonuses are not uniform and appear to be determined at the discretion of the Cabinet Secretary.