The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

“Absolutely” – Kenya President backs full oil contract disclosure

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President Kenyatta supports key demand of civil society on extractives contracts

There was one lasting highlight for me from this month’s US-Africa Leaders Summit in Washington. But it wasn’t during the billion dollar deals between US corporations and African nations, nor in celebrity-attended state dinners.

President Uhuru Kenyatta at the Brookings Institute on August 7, 2014. Photo: http://bit.ly/1rya4Rn

In a small group discussion at the Brookings Institution on August 7th, “Kenya’s Domestic, Regional and International Priorities: A Conversation with President Uhuru Muigai Kenyatta,” I was able to ask President Kenyatta whether his government would back full disclosure of petroleum agreements in his country.

Before the round of questions was over Pres. Kenyatta jumped in to answer my question, “Absolutely!

The country is experiencing an oil boom with a significant discovery by Tullow Oil in remote Turkana County in the north west of Kenya. As in other emerging and current oil and gas producers, concerns about access to key information by citizens – such as the contracts showing how much money Kenya will receive – are top of the list for civil society organizations such as those organized in the Kenya Civil Society Platform on Oil and Gas.

Absolutely! the president responded to me. He continued, In fact, the bill that is before Parliament is seeking to address precisely that so that it is quite clear, from day one, what is in those agreements. And we’re even going a stage further, to include public participation in the development of that draft bill, so that we ensure maximum transparency…

We have all seen the problems that are in many parts of the African continent as a result of that lack of transparency and we want to ensure that we get it right from square one…

This is good news as often extractive industry contracts remain hidden from public view. The government so often says the oil company doesn’t want them disclosed. The oil company says it is the government that is keen on secrecy.

In the case of the Turkana find, Tullow Oil has already stated that they are committed to full disclosure of petroleum agreements where the government gives its consent. (In Ghana, Tullow has already disclosed its agreements.) While most petroleum agreements have confidentiality clauses, the contracts can usually be discussed with the consent of both parties. Such confidentiality clauses are also not an obstacle to disclosing payments to governments as required by new US and EU laws since it’s standard practice to allow for disclosures of resource extractions required by regulators.

Setting the agenda for the development of Kenya’s oil and gas resources – the perspectives of civil society

Disclosure of petroleum agreements was one of the key recommendations in a landmark new report on Kenya’s oil boom, “Setting the Agenda for the Development of Kenya’s Oil and Gas Resources” issued by the Kenya Civil Society Platform on Oil and Gas on July 31. Without access to the agreements, civil society watchdogs, the media, and parliamentarians won’t be able to help ensure that the Kenyan government is collecting every shilling it is owed under the contracts from the coming oil boom.

A growing number of countries are disclosing their petroleum and mining agreements as a matter of course, including Peru, Liberia and others. Niger has included disclosure of mining agreements in its constitution. Guinea and Mozambique have also disclosed important resource deals. There is a growing focus on contracts in the extractive industries and in public procurement more generally as witnessed by the Open Contracting Partnership and other initiatives.

While it is not well known, one petroleum agreement signed by CAMAC Energy in Kenya is already publicly available on the U.S. Securities and Exchange Commission database. The Government of Kenya, Tullow, and all other companies that have contracts with the government in the extractive industries now need to agree on the disclosure of their agreements and contracts in Kenya so that citizens have a true understanding of these important commercial deals involving public resources.

Ikal Angelei, director, Friends of Lake Turkana; Charles Wanguhu, coordinator, Kenya Civil Society Platform on Oil and Gas; Ndanga Kamau, Oil and Gas Adviser, Oxfam Kenya. Photo: Ian Gary/Oxfam America

As Pres. Kenyatta said at the Brookings Institute event:

With the kind of civil society that we have in the country, with the kind of media, freedoms that we currently have in the country, we are not going to be able to take a single step without Kenyans at every single level, demanding to see what is tied in those agreements. So I think for Kenya anyway, and I don’t want to speak for anyone else, but for Kenya, the era of being able to do anything without scrutiny, is literally over.”

Let’s hope that this will indeed be the case. With its new “agenda setting report” and growing number of members, the Kenya Civil Society Platform on Oil and Gas is sharing a comprehensive set of recommendations and making good strides to ensure that there is a credible, collective advocacy/watchdog voice on the growth of the oil and gas sector. Civil society groups must build on their President’s words in Washington, DC and continue to demand the full disclosure of these agreements for the benefit of all Kenyans.

Join the conversation

  1. wkipkech@gmail.com'wilfred

    Its step in the right direction,
    but sometimes whatever civil organizations are advocating may be good for the citizens however you will realize all Most of them/the private NGOS are formed by people who are well connected and majority from the same ethnic group.
    They earn billions from Donors but few benefit…

    Reply
  2. oumaodhiambo@gmail.com'Maurice Ouma Odhiambo

    Hon Davis Chirchir
    Cabinet Secretary
    Ministry of Energy and Petroleum
    Nyayo House 23rd floor,
    Kenyatta Avenue
    Nairobi

    Principal Secretary
    Nyayo House 23rd floor,
    Kenyatta Avenue Nairobi State
    ps@energy.go.ke

    15th August 2014

    Dear Honorable Davies Chirchir, CS Energy and Petroleum,
    Dear Mr Joseph Njoroge, PS Energy and Petroleum,
    Re: Adopt full Transparency Standards by being Extractive Industries Transparency Initiative (EITI) candidates,
    Jamaa Resource Initiatives is a civil society organization advocating for communal participation and management of resources from resource rich communities. We work to explore the idea of self-reliance and community-led and resourced development. Jamaa Resource Initiatives has come into existence by understanding the need to reduce dependence on foreign aid. The work involves research, focused discussion, and debate on sustainability of development efforts by stakeholders throughout Africa. Jamaa Resource Initiative’s distinctive niche is based on one of the greatest challenges that confront the civil society sector. That of raising adequate resources to support development work. Jamaa Resource Initiative promotes and facilitates collaborative links within and among communities, individuals, and local businesses to increase efforts in pooling resources together from various international and local sources.
    We are interested in initiating public discussions and dialogue about the Extractive Industries Transparency Initiative (EITI) in Kenya and advocate for projects aimed at encouraging the government of Kenya to join EITI. The EITI is a voluntary initiative that seeks to promote publication, disclosure and verification of revenue and payments made to government by companies in the oil, mining and gas sector. The initiative is meant to eliminate corruption, conflicts and poverty otherwise termed ‘resource curse’ by increasing revenue and payments from mining, oil and gas resources. It was launched in 2002 and is a voluntary standard that can be joined by governments and mining, gas and oil companies. The EITI principles espouse the following; prudent use of wealth from resources for economic growth and poverty reduction, recognition of the sovereign duty of governments to use wealth for benefit of citizens and national development and the need for public understanding of government revenue and expenditure. The EITI also calls for public financial accountability and management by government and extractive companies and respect of contracts and laws.

    Further, the initiative recognizes the participation of all stakeholders in the process i.e. government, mining companies, communities, multilateral organizations, financial organizations, investors and non-governmental organizations. The EITI has criteria for countries that wish to implement and join it. In essence, countries should commit themselves to implement the following requirements; regular publication of all material mining payments made by companies to government and all revenue received by government from companies to a wide audience in a publicly accessible and comprehensive manner. The payments and revenues must then be subjected to a credible and independent audit and reconciled by an independent administrator whose opinion will be published. Participation of civil society in the design, monitoring and evaluation of the initiative is also critical.
    The potential benefits of EITI to Kenya are that it can help the country to promote transparency and accountability in the extractves sector which has been plagued by secrecy and ensure that natural resources benefit all Kenyans and not a few people. Further, it may attract foreign direct investment and ensure that mineral resource revenues are used for economic development and poverty reduction. The EITI may also act as a trigger for access to information and public participation in the extractives sector.
    We call for the establishment of an independent agency to regulate petroleum operations since no such agency exists. The current structure and appointments of members of the Energy Regulatory Commission, which regulates the entire energy sector including upstream petroleum does not give it the independence to check and balance political decisions.
    The government needs to develop a comprehensive spending, investment and savings policy to ensure that revenue management reflects national consensus. More so there is need for the establishment of several spending frameworks such as the Budget Fund, which would control spending of petroleum revenues, the Stabilization Fund which would be used to save and cater for crude oil price volatility, and the Future Generations Fund to safeguard the welfare of future generations of Kenyans. We call for the establishment of a legal framework for transparency in oil and gas. This includes contract transparency, revenue transparency and expenditure transparency.
    We call on extractive companies to develop, publish and implement policies on voluntary disclosure of payments just like Tullow did for their last years report, corporate social responsibility, human rights, anti-corruption and anti-bribery as well as Environmental and Social Impact Assessments and demonstrate their commitment to Free Prior and Informed Consent (FPIC) for communities and to establish participatory dialogue processes in order to develop community development agreements and environmental and social impact assessments and implement these agreements jointly with county governments, CSOs and communities.
    We would encourage the Kenyan Government to adopt full transparency standards by being the Extractive Industries Transparency Initiative (EITI) candidates, which is a global coalition of governments, companies and civil society working together to improve openness and accountable management of revenues from natural resources.
    Yours respectfully

    Maurice Ouma Odhiambo
    Executive Director
    Ngata Phase 3, Makao Project, Nakuru – Eldoret Road. P.O BOx 4393 Nakuru, 20100 Kenya
    Email: jamaaresourceinitiatives@gmail.com Website: http://www.jamaaresourceinitiatives.or.ke

    Reply

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