OIl & Mining Payback in Kenya

Tullow Oil have just released their Kenya Report on their oil exploration efforts and local impact in the last year with special emphasis on the Turkana area. And earlier, Base Resources who are a signatory to the Extractive Industries Transparency Initiative, had also released their EITI impact report.

In the last year, by their measure, Tullow Oil and Base Resources have paid the Kenya government $22 million and $16 million respectively in direct payments, and with more indirect benefits.  Oil and mining are industries that are complex and expensive to set up, but which don't generate a lot of direct jobs - some of their number include:

• Last year, Tullow paid Kshs 4.1 billion (~$48 million) to Kenyan suppliers, $100 million to foreign suppliers registered in Kenya and another $100 million to international companies. Of the Kenya supplier amounts, Kshs 259 million went to Turkana business interests.
• They still need Kenya petrol legislation. 
• Estimated findings are 600 million barrels  in South Lokichar alone.
• Infrastructure Needs: Looking at an export pipeline and regional road and rail. Regional countries need to support an export pipeline, agree on what route will such a pipeline take, where the terminal will be (likely to be Lamu) - and who will invest/pay for this. The proposed underground pipeline will need to be a heated one, and at 850 kilometres, will be the longest heated pipeline in the world
• Social Impact: Tullow have community resource offices in Lodwar, Lokori, and Lokichar - and this year, plan to double the Kshs 233 million ($2.75M) they spent on social projects in 2013, during which they faced community concerns and protests of local impact  which even temporarily shut operations. They have provided 3,000 bursaries and scholarships and teaching materials for 50 schools.
• Jobs Jobs Jobs: Tullow has 100 employees on site, 70% of who are Kenyan. Another 2,000 are employed by their subcontractors/suppliers and 87% of these are staffed by are locals, and 59% by Turkana people.

Financing Lake Turkana Wind

Monday this saw the signing of final agreements for the financing of the Lake Turkana Wind Power - LTWP project. This was the completion of a long, 9 year process that began with a fishing on trip on Lake Turkana, that yielded no fish, but a lot of wind on boat trip. 

The signing of finance deals worth 498 million euros (~ Kshs. 60 billion), will go towards LTWP which at Kshs. 75 billion is arguably both, the largest single wind power plant in Africa and, the largest single private investment in Kenya. 

The  Kenya Government has committed to raise the country’s electricity generation capacity to 5,538MW (from the current 1,533MW) by the year 2017. 630MW of that will be from wind, and they they have identified five strong wind areas in Ngong, Turkana, Kinangop, Kipeto and Isiolo - and hopes that using renewable sources of energy like wind will bring down the cost of electricity to consumers, and save on fuel import costs for the country.

The government’s KETRACO agency will build a 428 kilometer, 400 kV line, from Loyangalani to Suswa Suswa to Laisamis that they say will be ready in 24 months and which will also  link up with geothermal plants along the way. 

Image from LTWP website

The LTWP which will generate 300 MW, using 365 turbines in Laisamis (Marsabit) was registered in 2006, and brought one Aldwych International as an investment and development partner in 2009.

Financiers in LTWP include the African Development Bank (AfDB are the lead arrangers and who have provided a guarantee against some delays have also financed $1.7 billion in power generation in Africam with 39% iof that going to private sector companies) the European Investment Bank. Standard Bank (Stanbic), FMO, Nedbank, EADB, PTA, PKF, DEG, Proparco and soon OPIC (US)

Other partners in LTWP include Vestas (turbine supplier), the governments of Denmark (proving EUR 135 million including 120m in export credits), Netherlands, and Spain (who are financing the Laisamis- to Suswa transmission line).  

Next, the Kenya government wants to expand the number of last mile electricity connection while KETRACO also plan to extend the transmission lines to Northern and North Eastern Kenya - and on to Ethiopia, Tanzania and Uganda. This will serve the regional transmission purposes and also open up northern Kenya.

Joseph Njoroge,  the Energy principal secretary, said additional electricity opens up opporutunies such as enabling the pumping of crude oil, the Standard Gauge Railway is also planned to use electric trains, Iron Smelting, as well as clinker production (by Athi River and Dangote.