Business
Kenya or Uganda, Who gets oil first?
Regions demand share
But secrecy should not be understood to mean inactivity. In February 2012, then finance minister Njeru Githae requested a visiting International Monetary Fund (IMF) mission to draw up a fiscal policy framework for the country’s extractive industries. The IMF team delivered its confidential 81-page report last April. It makes a number of recommendations on how to design production-sharing agreements.
Notably, the report’s authors introduce what they refer to as the ‘R-factor’: a built-in ratio that automatically adjusts revenue shares after tax when oil prices rise above existing or anticipated prices. It is not clear how far the government has gone in implementing those recommendations.
While a review of the Mining Act is close to being tabled in parliament, there is no word on the progress of a Petroleum Act that would shape the emerging upstream oil sector. But the unaddressed issue of resource sharing is making little progress. Indeed, as the country moves into production mode, the questions of regional equity are only likely to grow stronger.
Last year, Tullow’s operations at its Ngamia-1 well were shut down for a month as locals picketed the company’s office demanding jobs. As an indication of the rapidly changing infrastructure terrain, oil services companies; notably Halliburton, Baker Hughes and the Egyptian firm Saxon Energy Services – have set up shop in Turkana, expanding from their Uganda operations.
Source: The Africa Report
