alexa Bill spells out formula for sharing oil billions - Daily Nation

Bill spells out formula for sharing oil billions

Thursday August 20 2015

Workers at the site of Ngamia well. Tullow says it expects to get as many as 3,000-5,000 barrels a day when it begins its operations. Photo/FILE

Workers at the site of Ngamia well. Counties where oil will be extracted are the biggest beneficiaries in the sharing of revenues coming out of the resource. FILE | NATION MEDIA GROUP

MWANIKI WAHOME
By MWANIKI WAHOME
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County governments where oil will be extracted are the biggest beneficiaries in the sharing of revenues coming out of the resource.

According to the Petroleum (Exploration, Development and Production) Bill, 2015, the devolved units will get 20 per cent of the national government share with oil companies.

Communities will also get another five per cent, leaving the national government with 75 per cent that will go to the exchequer to be distributed to other parts of the country through the national budget.

SHARED REVENUE

The amounts allocated out of the shared revenue, however, should not be twice those set aside by the National Assembly in that year.

Turkana County where oil deposits have been discovered, was allocated Sh11 billion this year. This means that if the Bill is adopted, it will not get more than Sh22 billion from the oil.

“The county government share shall be equivalent to 20 per cent of the national government’s share. Provided that the amount allocated ... shall not exceed twice the amount allocated to the county government by the National Assembly in the financial year under consideration,” the Bill says.

Residents in these counties will also have their share to be used to fund projects and offer services, and will be managed by a trustee on their behalf.

LOCAL COMMUNITY

The amount should not, however, exceed a quarter of that due to the county government in consultation with the local community.

“The respective county government shall legislate on the establishment of board of trustees and prudent utilisation of the funds received for the benefit of present and future generations.”

A Upstream Petroleum Regulatory Authority will be established to oversee the activities in the sector that is expected to contribute significantly to the economy in a few years.

“The local community share shall be equivalent to 5 per cent of the National governments share,” it says.