THE CONSTITUTIONAL AND LEGISLATIVE RESPONSES ON DILEMMAS FACING SHARING OF OIL BENEFITS: THE CASE OF OIL AND GAS DEVELOPMENT IN TURKANA, KENYA

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By Tioko Ekiru Emmanuel

The massive discovery of oil, gas and minerals in various parts of the world has been established to be key drivers’ source of great wealth in resource-rich nations. Furthermore, the domestic use of such resources can spur the development of industries, creation of employment, and contribution to better social conditions through energy production. On the other hand, the extraction and export of such resources can generate enormous revenues which, if used properly, could also be a catalyst for development in these nations. Unfortunately, however, many resource-rich countries are not benefiting from this wealth but instead are experiencing great poverty and unstable living conditions. This phenomenon is commonly known as the “resource curse” or “paradox of plenty.” The resource curse describes a situation where, instead of boosting a country, natural resource wealth actually leads to further corruption, repressive conditions, poverty and conflict.

Many countries that are rich in natural resources are badly governed. Revenues generated from the sale of resources are often stolen or squandered through corruption and a lack of government accountability. The authority of sitting governments or power structures within a country can therefore be maintained through the accumulation of resource revenues into the hands of a few. Consolidation of revenues by sitting governments, particularly those that rely on military means to maintain power, can exacerbate repressive conditions. There is a correlation between the rise and fall in the price of petroleum with the rise and fall in the protection of human rights in major oil-producing countries.

Of great importance to note is that the discovery of valuable resources in Kenya, including oil, has in recent times elevated the discourse of extractives. A lot of attention has been drawn to Base Titanium deposits in Kwale County, which commenced its exploration activities in 2010. Interestingly, Tullow Oil has attracted sharp scrutiny since the 26 May, 2012, when the Kenya’s former president, Mwai Kibaki, announced the discovery of oil in Turkana County.

Exploration for oil in Kenya has been informed by the understanding that discovery would open many benefits including increase of income, creation of employment and skills acquisition for host communities, development of socio-economic services such as water, schools, healthcare, vocational training institutions and improvement of the nation status in the international platform, reduction of oil import and faster development of commercial and manufacturing activities in the country.

Worth to note is that to achieve these benefits, however, calls for comprehensive legal framework and efficient governance structures that ensure transparent, accountable and sustainable management of these resources. The demand for legal frameworks and vibrant governance structures is vital for the purpose of ensuring effective and equitable mechanisms for the sharing of the benefits and burdens of natural resource exploitation among all the relevant natural resource stakeholders, especially the host communities.

The Kenya exploration efforts has been as well inspired and intensified by success in oil exploration by her neighbour Uganda with the discovery of commercial petroleum resources in 2006 leading to four oil fields namely, Mputa,Waraga, Nzizi and Kingfisher.

Nevertheless, even as much extractive activities have proved successful, it has always posed serious challenges to both the environment and society. This is because most mining operations occurs in areas that have experienced historical marginalisation such as those inhabited by special groups like indigenous people and pastoralists. These areas therefore face numerous challenges such as conflict due to lack of proper equitable benefit formula of extractives, environmental damage, livelihood destruction ,lack of employment, weak government capacity to deliver goods and their exclusion ( host community) from the table of decision makings. As result of these challenges disparities have occurred. The gap between the rich and the poor has intensified. Lack of effective mechanisms to involve the host community in the benefit sharing of extractives have generated tensions, leading to varying degree of conflict, from community protests to actual armed struggle for the control of mineral resources.

Scholars in the field of oil and gas law have engaged in extensive research and they have established that for a close of seventy-six years, the extractive in Kenya has been governed by the colonial-era law, which was repealed in 2016.

From the standpoint, it is clearly shown that the mining of extractive had been beset by the extractive practices that were hostile to host communities due to weak legislative, policy and regulatory framework. On the face of these weak legislations and policies, the host population encounters the following negative issues: loss of community production factors such as ancestral land, water, pasture and communal cultural site; environmental degradation that had negative impact on food production and detrimentally affected human and animal health; inequitable sharing of benefits of mining, which saw mining multi-national corporations benefit hugely from natural resource exploitation to the detriment of the communities, and lack of popular participation in the management of mining and other challenges.

The constitution of Kenya has sets the scene for substantial legislative reforms including those relating to land tenure, environmental protection and conservation ,citizen participation and benefit sharing, transparency and access to information, which are all relevant to the development of extractive sector.

The social, economic and political ordering of Turkana

Turkana is Kenya’s second largest county after Marsabit, with an area of 77,000 square Kilometres, situated in Northwest part of the country. The county is dominated by Turkana people who are the plains Nilote group. The county borders Uganda, Sudan and Ethiopia. There are also seasonal movement of other various pastoral groups across local and international borders, including the Karamojong and Jie(from the west),Pokot (south-west), Samburu(south-east),Dodoth and Toposa, Merille and Nyangatom(north-east).Some of the group are closely related and share a common language and culture , and various traditional and shifting patterns of friendship and rivalry.

The 2009 Kenya Housing and Population Census Report, the county’s population was established at 860,000 people. However, it is important to point out that these populations, together with that of the counties of the former North Eastern, are among those that were considered as being inconsistent. The expansive land mass of the county, weighed against its population, makes it be a sparsely populated area.

The main economic activity of Turkana’s people is pastoralism (rearing of livestock). However, the community also engages in some farming activities along River Turkwel and River

Kerio. Further, the Turkana people also undertake mining activity like gemstones, saltlicks, alluvial gold, weaving, charcoal burning and some form of tourism.

The county experiences prevalent level of drought due to low rainfall which ranges between 120 and 600mm per year and characterised by moisture deficit most of the year. These therefore negate high level of food insecurity manifested through impoverished, acute food scarcity, malnutrition and high child mortality.

Under the new the 2010 dispensation, the county is governed by the governor who is the highest political organ in the hierarchy of the county’s leadership.

Generally, Turkana is one the least developed, marginalised and famine and drought-prone counties in Kenya. It suffers from cross-border conflicts, cattle rustling, and proliferation of illicit arms used by bandits.

The discovery of Tullow Oil back 2012 was expected to accelerate the development and change the face of Turkana County and its people owing to many years of historical marginalisation by the Kenya’s successive regimes. However, new tensions and conflicts are emerging as oil and gas discoveries shape the development in Turkana. These include investor-community tensions and inter-communal tensions on domestic and international borders. On the other hand ,the national government of Kenya and investor have failed to involve the community in the resource sharing deal a matter that is likely to fuel potential conflict of a phenomena known as ‘Oil curse’.

These conflicts and tensions occurs against the background that both colonial and postcolonial governments have historically given less attention to Turkana, and other regions famously known as ‘Northern Frontier districts which comprises of( Mandera, Marsabit, Moyale, Wajir, Ijara, Isiolo, Laikipia and Samburu.

It is imperative to note that in order to benefit all actors from resource extractive both the government, locals and investor should embrace an effective inclusive and participatory approach. The principle of sovereignty enshrined in the 2010 constitution vests the host communities in the regions where resource extraction occurs to participate in deciding how to spend the returns of extractive activities. The sovereignty aspect, additionally, involves regular and transparent disclosure of information related to issue like prospecting of mining licences and the formula for benefit-sharing. Sovereignty entails consultation of the affected persons in deciding matters related to compulsory acquisition of their lands, and measures intended to mitigate potential environmental hazards. Failure to adopt this approach might negate the whole country to travel in the infamous route of ‘resource curse’ that rocked hardly in the recent past Democratic Republic of Congo(DRC), Sudan ,Somalia, Nigeria and Angola.

The Concept of Benefit-sharing

The Natural Resource Benefit-sharing Bill of 2014 defines benefit as any gains, proceeds or profits from the exploitation of natural resources. Whereas benefit-sharing is regarded as a critical component in enhancing company-community harmony and enabling a company to achieve the social licence to operate.

In the ordinary sense benefit-sharing mechanisms can be voluntary based on the corporations’ Corporate Social Responsibility (CSR) activities, or can be based on governmental legislation. The essence of these mechanisms is the generation of broad –based socio-economic development that uplifts the standards of living of the host communities.

Some of the mechanisms have been pointed out to include: The development of socio-economic infrastructure such as roads, hospitals, schools, water points and access to electricity for the benefit of the host communities, compensation for loss of land and other production resource as result o f mining-based displacement, adoption of mitigation mechanisms to minimise the harmful social and environmental impact(s) of mining activities; training and employment of locals as staff in affirmative employment quotas and payment of mineral taxes and royalties for local community development.

Benefit-sharing can be implemented through monetary or non-monetary programmes. Monetary benefit sharing entails putting into place mechanisms for ensuring that monetary flows arising from the operation of the infrastructure projects are shared with the affected communities through predetermined ways such as: revenue distribution, preferential rates, property taxes, equity sharing/full ownership, and development funds. Non-monetary benefit-sharing on the other hand, involves integrating project which are supposed to enhance community development and improvement of their living standards. This could be implemented through several ways such as livelihood restoration and enhancement, community development, as well as catchment development.

Benefit-sharing is premised upon two underlying philosophies. These are the philosophy of Public Trust Doctrine and that of the Principle of Permanent Sovereignty over Natural Resources. The Public Trust Doctrine historically derives from the public commons. It underlines t hat all human commons be preserved for the public use, and that the state is responsible for the protection of the public rights to the predetermined ways.

The objective of benefit-sharing is to ensure that a significant portion of the benefits generated from mining in a particular area is retained in that area for the benefit of local populations. The local community has been understood to encompass the population which lives close enough to the mine so much so that their livelihood, way of living or environment is directly or indirectly impacted upon by the mining project.

The concept of benefit-sharing as a right was formalised in international law in the context of the protection of biodiversity in the Convention on Biological Diversity. It is buttressed by attendant community rights such as the right to self-determination, the right of a people to freely dispose of wealth and natural resource as well as the right to development, which are contained in Africa Charter on Human and people’s Rights.

The Quest for the Effective regime governing Benefits sharing in the Extractive Sector

As noted, in the introduction part, the current regime governing extractive sector are inadequate thus there is need of streamlining to meet the people’s expectations and aspirations. The resource curse phenomena can only be averted if proper legal frameworks are put in place. This part endeavours to analysis the existing regime governing extractive industry in Kenya.

The 2010 Constitution

On 27th August 2010, the Kenyans people courageously took a revolutionary path by adopting one of the robust and progressive Constitutions in the world. The new Constitution ultimately, changed the governance structure and societal space. Thus it is the apex of framework where other laws drive their validity. To great extent, the Constitution lays the foundation for sustainable development and equitable sharing of natural resources as one of the values and principles of good governance. The Constitution as well is entrenched with national values and principles of good governance as evidently laid in Article 10. The state is vested by the Constitution responsibility to ensure sustainable exploitation, utilisation, management and conservation of the environment, natural resources, and ensure the equitable sharing of the accruing benefits. This constitutional provision is replicated by section 6(1) of the mining Act. The state is granted special role in holding all minerals and oil in trust for the people of Kenya. Further, the Constitution guarantees the right to a clean and healthy environment, which includes the need to protect the environment for present and future generations, conservation and protection of ecologically sensitive areas, equitable access to land, and sustainable production of land.

It is important to note the Constitution provides for popular oversight of the mining process by requiring that transaction for the grant of mineral rights or concessions be ratified by parliament. This facilitates parliament to asses and scrutinise such agreements to ensure that they are beneficial to the locals. The process of parliamentary assessment further encompasses the people participations and their involvement in legislative and other business including involvement in its committee.

The Petroleum (Exploration, Development and Production) Amendment Bill, 2017

The Petroleum (Exploration, Development and Production) amendment bill is meant to give effect the demand of Article 71 of the Constitution, of Kenya. The proposed law was developed to provide a framework for the contracting, exploration, development and production of petroleum; cessation of upstream operation; and to give effect to the Constitutional provisions.

The most contentious part in the Bill is section 85 governing sharing of the petroleum proceeds which repeatedly has ignited the serious mistrust among various actors in the oil sharing deal. Earlier then, the proposed oil sharing formula was to be apportioned to the National, County Government and local communities on the basis of 70, 20 and 10 percent respectively. However, president Uhuru-Turkana leaders’ pact eventually aborted the proposed pact and finally set a new deal of 75 percent for all Kenyans through the National Government, 20 percent to the County government and 5 percent to the local community.

A quick scrutiny of president Uhuru-Turkana leaders’ deal, demonstrate nothing new but rather a vigorous plot to kill local’s dreams. In view of longstanding marginalisation, loss of ancestral land, insecure northern corridors, oil negative implications among other issues, Turkana should have been granted a fair benefit accrued from oil resource.

The Mining Act, 2016

This Act defines mining operation to entail an operation carried out in connection with a mine-to win a mineral from where it occurs; to extract metal or precious mineral from a mineral so won; or to beneficiate a mineral so won; or to dispose of a mine waste or tailings resulting from winning, extraction or benefaction. The Act further defines a “mineral” as a geological substance whether in solid, liquid or gaseous form occurring naturally in or the earth, in or under water, in mine waste or tailing and includes the mineral specified in the First Schedule but does not include petroleum ,hydrocarbon gases or groundwater. The Act outlines for accruing benefits in the form of financial and other benefaction to which communities where minerals are extracted are entitled to receive. The 2009 African mining vision accurately point out that the benefits to local community may come in various forms including revenues which 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 and non-income benefits such as employment for local residents; assistance to community health and educational institutions; access to the use of mine infrastructure by general public.

The community Land Act, 2016

This legislation is geared towards enforcement of Article 63(5) of the constitution; to facilitate for the recognition, protection and registration of community land rights; management and registration of community land; to provide for the role of county government in relation to According to the Act “community” as the organized group of users of community land who are citizens of Kenya and share any of the following attributes-common ancestry, similar culture; socio-economic or other common interest; geographic space or ecological space. This is demonstrated by the provision of section 36 that provides that subject to any other law, natural resources found in community land should be used and managed –sustainably and productively; for the benefit of the whole community including future generations; with transparency and accountability; and on the basis of equitable sharing accruing of benefits. The act further proclaims that an agreement relating to investment in community land should be made after a free ,open consultative process and should contain provisions on the following aspects- an environmental, social, cultural and economic impact assessment; stakeholder consultation and involvement of the community; continuous monitoring and evaluation of the impact of the investment to the community ;payment of compensation and royalties; requirement to rehabilitate the land upon completion or abandonment of the project; measures to be put in place to mitigate any negative effects of the investment; capacity building of the community and transfer technology to the community; and other matters necessary for determining how local communities will benefit from investments in their land.

The Local content Bill, 2016

The Bill is founded on Article 69(1) of the Constitution that imposes obligation on the State to ensure sustainable management of natural resources and the equitable sharing of the benefits accruing. Moreover, the Bill is predicated on the demands of Article 66(2) of the 2010 Constitution, which requires Parliament to enact legislation ensuring that investments in property benefit local communities and their economies. Further the Bill requires the National Government, in collaboration with the county government, to put in place measures to ensure that mining operators develop and adopt local content in the entire mining value chain. It also establishes the Local content Development Committee(LCD Committee) with the following responsibilities: oversight ,Coordination and development of local content; issue advice in the formulation and development of policies and strategies on local content; recommend minimum standard requirements on local content ;appraise, evaluate and approve local content plans of mining operators ;capacity building in collaboration with county governments to develop local skills and capacities in the extractive sector.

The County Government Act, 2012

The Act came into existence after the passing of new Constitution. Part III of the Act provides for citizens participation as one of the essential requirement in the new country’s order. This includes but not limited to protection and promotion of the interest and rights of minorities ,marginalized and communities and their access to relevant information ,timely access to information ,data, documents , and other information relevant or related to policy formulation and implementation legal standing to interested or affected persons ,organizations, and where pertinent, communities, to appeal from or, review decisions, or redress grievances, with particular emphasis on persons and traditionally marginalized communities ,including women, the youth, and disadvantaged communities.

Natural Resources (Benefit Sharing Bill) 2015

This legislation tends to establish a system of benefit sharing in resource exploitation between resource exploiters, the national, county and local communities, to establish the natural resource benefit sharing authority and for connected purposes. Further, the Act applies in respect to petroleum and natural gas, among other natural resource. It provides for guiding principles to include transparency, and inclusivity, revenue maximization 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 organizations, review and where appropriate determine the royalties payable to an affected organization 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 organization, conduct research regarding exploitation and development of natural resources and benefit sharing in Kenya recommend on better exploitation of natural resources in Kenya, determine appeal arising from conflict relating to natural resource benefit sharing.

Conclusion

Having joined the international scene as one of the oil and titanium producer in Turkana and Kwale counties respectively, Kenya is therefore in commendable path to the road of economic stability. This is because the recent discoveries of natural resources in various parts of the country signal a new dawn in the extractive sector. The discoveries in recent time has elevated the discourse expected in the sector especially on improvement of locals livelihood, resource sharing mechanisms, infrastructure creation, job opportunities, revenue generation and among many others. However, it goes without saying that though extractive sector can be a catalyst of development, it can be equally potential driver of conflict and instability, particularly in the instances where there is mismanagement of the resource allocation. As result it may ‘breed Oil curse phenomena’ which in the previous past rocked Republic of Congo (DRC), Sudan, Somalia, Nigeria and Angola. The host community has been noted to be the most affected in the resource allocation arena yet they are very instrumental actors in the whole process. There have been intense moot questions concerning the failure by the government and investor to include the locals communities to the roundtable of decision-making on the criteria of proceed sharing emanating from extractive industries. Worries regarding government’s reluctance to foster transparency and accountability, fears concerning loss of land ownership, environment pollution, and acquisition of interests in extractive industries, and disquiet related to the manner of sharing proceeds of the extractive sector has elicited the demand of sound legal, institutional and policy frameworks. It should be noted that the existing constitutional and legislative framework governing the extractive sector are inadequate and skewed on the manner on which the local voice is enhanced in the distribution of resources. There is need for a paradigm shift to ensure all key actors issues are addressed effectively. This will avoid the potential looming dilemmas!

  • Tioko Ekiru Emmanuel is a finalist student Moi university school of Law. He is also the President of Law Students Society of Kenya (LSSK)-Annex Chapter, in the same University.
  • An earlier version of this paper was published in my Dissertation for a ward of LLB degree Moi university, 2018.