Kenyan Energy Bill

From Oil4All
Jump to: navigation, search

A new Energy Bill was to be presented to parliament in November 2013, but the regulatory framework is not expected to be in place until early 2014 due to the ongoing trials of President Uhuru Kenyatta and Deputy President William Ruto at the International Criminal Court.[1] The Bill has been redrafted three times, and the most recent version can be seen online.[2] The new Bill will replace the 2006 Energy Act [3] and update the Petroleum Act.[4] Broadly the draft Bill calls on the Cabinet Secretary to develop an integrated energy plan for a period of at least 25 years based upon the plans outlined in the Bill.[5]

Short term goals of the Bill

According to the Energy and Production Magazine (E&P Magazine), the short term goals (between 2014 and 2016) of the Bill are to provide the government with a legal mechanism by which it can:[6]

  • negotiate with investors on the licensing terms for exploration, production, and development of petroleum and coal blocks.
  • subdivide and create new petroleum exploration blocks based on technical data.
  • establish a national petroleum data center.
  • enhance local exploration and production expertise through research, training, and technical collaboration with exploration companies and universities.
  • enforce terms of production sharing contracts.
  • review the Petroleum Act and formulate guidelines to provide for gas-sharing terms, compensation, windfall profits, royalties, corporate social responsibilities, terms of assignment and change of control, and transfer of PSCs to third parties by licensees.
  • develop a policy on the management of commercial petroleum discoveries.
  • restructure and enhance the financial capacity of the National Oil Corporation of Kenya (NOCK) to conduct upstream business.

Long term goals of the Bill

In the long term (between 2014 and 2030), the Bill aims to intensify petroleum exploration and production activities in Kenya, and develop and utilize local content capacity.[7] The third draft of the Energy Bill states that its long term goals are to:[8]

  • utilize energy as a tool to accelerate economic empowerment for the National and County Governments as well as urban and rural development.
  • improve access to quality, reliable and affordable energy services.
  • provide a conducive environment for the provision of energy services.
  • promote development of indigenous energy resources.
  • promote energy efficiency and conservation.
  • ensure that prudent environmental, social, health and safety considerations are factored in energy sector developments.
  • ensure that a comprehensive, integrated and well informed energy sector plan is put in place for effective development.
  • foster international co-operation in energy trade, investments and development.
  • promote energy research, development, training and local manufacture of energy plant, equipment, appliances and materials.
  • promote appropriate standards, codes of practice and specifications for equipment, systems and processes in the energy sector.
  • promote diversification of energy supply sources to ensure supply security.
  • promote healthy competition in the sector.
  • protect consumer interests.
  • promote both local and international investments in the energy sector.
  • promote an elaborate response strategy in energy related disaster management.
  • generate at least 70% of electricity from clean or renewable resources and build the infrastructure necessary to transmit that electricity.
  • provide for the phased transfer of provision of energy services to the Counties in accordance with Article 174 of the Constitution.

Sovereign wealth fund, national and regional split of oil revenues

The Bill also stipulates how the revenues from future oil and gas extractions should be shared between the the national and regional authorities and proposes that petroleum revenues should be split at a ratio of 80 percent for the national government, 15 percent for county governments and five percent for the local community affected by the resource discoveries.[9]

Further, the draft Bill suggests (in Clause 159) the implementation of a petroleum sovereign fund, the purpose of which should be to:[10]

  • provide an endowment to support the development for future generations when petroleum reserves may have been depleted
  • cushion the impact or sustain public expenditure capacity during periods of unanticipated petroleum revenue shortfalls
  • build a savings base for the Kenyan people
  • enhance the development of Kenyan infrastructure
  • provide stabilization support in times of economic stress
  • receive excess petroleum revenue

External links

Third Draft: National Energy Policy

References

  1. Kenya Developing New Oil & Gas Regulation”. The East African Energy Blog, 29 September 2013.
  2. Third Draft: National Energy Policy”. Ministry of Energy, 11 May 2011.
  3. Overview Petroleum”. Energy Regulatory Commission, retrieved 23 October 2013.
  4. Kenya Developing New Oil & Gas Regulation”. The East African Energy Blog, 29 September 2013.
  5. Kenya Developing New Oil & Gas Regulation”. The East African Energy Blog, 29 September 2013.
  6. Kenya’s Energy Bill Delays Oil Licensing Round”. E&P Energy, 18 October 2013.
  7. Kenya’s Energy Bill Delays Oil Licensing Round”. E&P Energy, 18 October 2013.
  8. Third Draft: National Energy Policy”. Ministry of Energy, 11 May 2011.
  9. Kenya Petroleum Sector Scoping Study”. Sustainable Integrity GmbH, April 2013.
  10. Kenya Petroleum Sector Scoping Study”. Sustainable Integrity GmbH, April 2013.