Kenya Sector Plan for Oil and Other Minerals 2013-2017

1.1 Background viii

1.2 Organization of the Sector Plan viii 2   SITUATION ANALYSIS IX 2. Introduction ix

2.2 Oil and Gas ix

2.3 Other Minerals ix

2.4 The Role of Ministries of Energy & Petroleum and Mining x 2.5 The Role of Parastatals /Semi Autonomous Government Agencies (SAGAs) in the sectorx

2.6 The Role of Private Sector x

2.7 Stakeholders Analysis 1

2.8 Current Regulatory Framework 2 3 CHALLENGES AND EMERGING ISSUES 4

3.1 Legal, Regulatory and Institutional reform 4

3.2 Government Revenue Collection 4

3.3 Politics, dispute management and environmental issues 4

3.4 Managing Expectations 5

3.5 Transparency, Rents Transfer and Rent Seeking 5

3.6 Devolution and Land Issues 6

3.8 Resource Curse and Institutional Set-Up 6

3.9 Regional Implications 6

3.10 Other challenges in the sector 7 VISION 2030 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 v ABBREVIATIONS & ACRONYMS DRSRS - Department of Resource Surveys and Remote Sensing DPs - Development Partners GDP - Gross Domestic Product GoK - Government of Kenya ICT - Information and Communication Technology IOCs - International Oil Companies KETRACO - Kenya Electricity Transmission Company KPC - Kenya Pipeline Corporation KPRL - Kenya Petroleum Refineries Ltd KSh. - Kenya Shilling LAPSSET - Lamu Port & South Sudan-Ethiopia Transport LPG - Liquefied Petroleum Gas MoE&P - Ministry of Energy & Petroleum MoM - Ministry of Mining MTP - Medium Term Plan MW - Megawatts NAFFAC - National Fossil Fuel Advisory Committee NMC - National Mining Corporation NOCK - National Oil Corporation Kenya OEL - Oil Exploration License REE - Rare Earth Elements SAGAs - Semi-Autonomous Government Agencies vi VISION 2030   SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 EXECUTIVE SUMMARY The Second Medium Term Plan (2013-2017) of Vision 2030 was launched by H. E. The President on October 3, 2013. This paved way for the preparation of various sector plans to guide the implementation of MTP II. Ministries of Mining, and Energy & Petroleum were tasked to develop Oil and Other Mineral Resources Sector Plan. The Plan outlines the policies, strategies, programmes and flagship projects to be given priority over the Second MTP period. The Oil and Other Mineral Resources Sector currently contributes to about one 1 per cent to Kenya’s Gross Domestic Product and three 3 per cent total export earnings in terms of resource allocation and implementation. The sector has great potentials to help the country attain the 10 per cent growth target envisioned in the Vision 2030 that will make Kenya to be a globally competitive middle-income country by 2030. Due to this envisaged contribution of the sector in spurring economic growth and development through foreign exchange earning, creation of employment opportunities, industrial growth and infrastructural development, it has been identified as the 7th priority sector under the Economic Pillar of the Vision 2030. The sector, however, faces a number of challenges and emerging issues including weak legal, regulatory and institutional framework, high expectations, huge capital outlays, inadequate budgetary allocations, understaffing, inadequate technical capacity, conflicts with community, and environmental degradation. To address some of these challenges and emerging issues, the Ministry of Mining and Ministry of Energy & Petroleum are currently reviewing the outdated policies, bills and Acts to align them to the Constitution of Kenya and make them to conform to international best practices and standards. The two ministries have established directorates and are setting up new institutions and/or restructuring the existing ones with a view to improving their efficiency and capacity to coordinate, manage and govern the operations of stakeholders in the sector. Digitalization of operations such as licensing is on-going and this will improve integrity, transparency and accountability in the sector. In addition, other flagship projects outlined in Second MTP for implementation include developing infrastructure i.e. rail, port and pipeline; improving laboratory analysis of petroleum and other minerals; enhancing exploration and exploitation of oil/gas and other mineral resources; and improving geological and geophysical data among others. The implementation of the Oil and Other Mineral Resources Sector Plan will be done by key stakeholders; Ministry of Mining and Ministry of Energy & Petroleum, Parastatals/SAGAs in the two ministries and private sector. These implementing agencies will develop annual work-plans, cost the activities and develop specific, measurable, achievable realistic and time-bound indicators that will be used to monitor and evaluate the implementation of the Plan. Monitoring and evaluation will be done in a participatory manner by M & E Committee, who will report on the achievement of the targets on quarterly basis. Annual reports will be published and shared among stakeholders. . VISION 2030 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 vii 1 INTRODUCTION

1.1 Background Under Constitution, all natural resources (including those below the surface) belong to the National Government. In this context, the Government owns the resources in trust for the people of Kenya, brining into focus some type of a principal-agent relationship. However, the same Constitution gives a significant number of responsibilities to the Government with regard to its duty to the citizenry. As such, the Government must remain accountable to its people regarding all its functions and operations and specifically with regard to management of natural resources for the benefit of the country. In development of mineral resources, this can be done by ensuring that the Government’s dealings with explorers (and later developers) are in the interest of the state while attracting activity in the sector. In other words, the elements of the Productions Sharing Agreements must in no way compromise economic and constitutional goals while remaining attractive to investors. Kenya is endowed with a variety of mineral resources including base metals(gold, silver, copper), dimension stones (granite, marble and limestone), industrial minerals (fluorspar, titanium and limestone), gemstones (ruby, sapphire, rhodolite) and chemical minerals( soda ash, carbon dioxide, salt and hydrocarbons), and recently , fossil fuels (coal, oil and gas). Minerals occur in a variety of locations in Kenya, and some of these areas have limited alternative sources of economic activity. Kenya is under-explored as far as petroleum and natural gas are concerned. There are positive indications of hydrocarbon potential in the form of oil seeps, gas and oil, but only relatively few exploration and development wells have been drilled. The Oil and Other Mineral Resources sector has been identified as an additional priority sector under the Economic Pillar of Kenya Vision 2030. The sector currently contributes about one (1) per cent to Gross Domestic Product (GDP) and three (3) per cent total export earnings to the economy. Although this contribution is not significant, the potential for higher contribution exists following the recent discoveries of strategic minerals such as oil in Turkana County, Titanium and Rare Earth Elements (REE) in Kwale County, coal and gas in Kitui and Lamu Counties respectively. Once exploitation and exportation of the minerals begin, the contribution to GDP is expected to rise to three (3) per cent by 2017. It is expected that with more discoveries, development and management of oil, gas and other mineral resources, industrial growth can be realized. The extractive industry will create employment opportunities to Kenyans thus alleviating unemployment and poverty. It will also spur economic growth and development in form of social amenities such as roads, railways, health facilities, electricity, water and schools among others. It is against this background that this Sector Plan is developed by the Ministries of Energy and Petroleum and Mining. This follows the successful launch of the Second MTP on October 3, 2013. The Oil and Other Mineral Resources Sector Plan 2013 - 2017 outlines the policies, strategies, programmes and projects to be given priority in terms of resource allocation and implementation. It is expected that successful implementation of the programmes and projects outlined in this Plan will help the country attain the 10 per cent growth target envisioned in the Vision 2030 that will make Kenya to be a globally competitive middle-income country by 2030.

1.2 Organization of the Sector Plan This Plan is organized in six (6) chapters. Chapter one provides introduction. Chapter Two highlights the situational analysis of the sector. Chapter Three outlines the challenges and emerging issues in the sector while Chapter Four presents the programmes and flagship projects. Chapter Five presents the policies, legal and institutional framework in which the sector operates. Chapter Six highlights monitoring and evaluation of implementation of this Plan. viii VISION 2030   SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 2 SITUATION ANALYSIS 2. Introduction The Government recognizes the importance of oil and other mineral resources sector in facilitating economic growth and development. As a result, oil and other mineral resources sector has been identified as a priority sector under the Economic Pillar of Kenya Vision 2030. This chapter presents the situation and stakeholder analyses for the sector.

2.2 Oil and Gas Oil exploration in Kenya dates back to early 1950s when the first oil exploration license (OEL1) was granted to B.P. Shell Development Company to operate in the Lamu Embayment. A total of forty five (45) wells have been drilled to date with oil being discovered in seven (7) i.e. Ngamia 1 (Block 10BB), Twiga South 1 (Block 13T), Etuko 1 (Block 10BB), Agete 1 (Block 13T), Ekales 1 (Block 13T), Amosing 1 (Block 10BB) and Ewoi 1 (10BB) wells. Natural gas has been discovered in Mbawa 1 well offshore Block L8. Additional exploration and drilling by several companies operating in both onshore and offshore blocks is ongoing. Therefore, with efforts to drill more wells, discoveries are expected to be enhanced in the country’s exploration blocks. The discoveries of oil in the Tertiary Rift Basin and gas in the Lamu Basin indicate the existence of commercial quantities of hydro-carbon potential thus Kenya becoming an oil and gas producing nation in future. Furthermore, oil developments in Uganda and South Sudan make Kenya a viable site for oil transportation and processing facilities. As a result of oil and gas discoveries, there has been increased interest in upstream fossil fuel activities in the country. Currently, twenty one (21) International Oil Companies (IOCs) and National Oil Corporation Kenya (NOCK) are carrying out exploration activities in the forty one (41) licensed blocks. These companies are at different stages of exploration, some being in the preliminary stages of geological and geophysical data acquisition and others carrying out exploratory drilling. The presence of IOCs has ignited high interest in major service companies which are strategizing to seize the existing opportunities. Services relating to petroleum exploration are mainly; seismic survey, well logging and testing, drilling, rig services and a wide range of other associated services. The provision of these services will help to accelerate exploration and ultimate discovery of additional oil and gas in the country.

2.3 Other Minerals Kenya has a wide range of minerals such as soda ash, fluorspar, diatomite, gemstone, limestone, barite, gypsum, salt, dimension stones, silica sand, Kisii stone (soapstone), manganese, zinc, wollastonite, graphite, kaoline, copper, gold, lead, nickel, iron ore, carbon dioxide, chromite, pyrite, various clays, niobium and rare earth elements, pyroclore, titanium and coal. Coal exploration is ongoing in Kwale, Kilifi, Meru and Isiolo Counties. Thirty one (31) exploration blocks have been delineated awaiting gazettement and concessioning. This will enable a widespread coal exploration programme in the county. Mining is an extractive industry and is key to providing raw material for various uses including industrial development. Since independence (1963), this industry has experienced little growth. This has been contributed by inadequate budgetary allocation, inadequate regulatory framework, and large capital outlays required for exploration. As a result, the existing Mining Act is being revised to make it confirm with modern international standard. Other relevant acts to support the sector also need to be formulated. Currently, mining contribute about 0.8 percent to GDP. Going forward, the sector will aim to spur growth and development of the industry to reach a 10% annual growth in mining revenue from mineral royalties VISION 2030 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 ix and related taxes. To achieve this, the ministry will: fast-track enactment of a new Mining Policy and Bill; draft a new Explosives Policy and Bill; enhance mine and mineral audits; carry out statutory obligations under the Acts administered by the Ministry; upgrade mining cadastre to allow online transactional applications; improve openness and accountable management of revenues from minerals; intensify geological survey by carrying out a national airborne geophysical survey to map out where potential mineral deposits are located; follow up airborne survey with field mapping; intensify exploration of iron ore and coal; create a internationally accredited mineral certification laboratory; narrow the skill gap in mining sector so that the sector employs more Kenyans; build institutional capacity; and undertake reorganization including establishing coordination structures with County Governments. In addition, the ministry will endeavour to facilitate creation of mineral and metals commodity exchange, mineral audit agency and mineral value addition centers

2.4 The Role of Ministries of Energy & Petroleum and Mining The mandate of the Ministry of Energy and Petroleum in regard to this sector plan is energy policy and development; energy regulation, security and conservation; fossil fuels exploration and development; oil and gas and minerals sector capacity development; and petroleum products, import/export/marketing policy management. The mandate of Ministry of Mining in regard to this sector plan is mineral exploration and mining policy and management; inventory and mapping of mineral resources; mining and minerals development; policies on the management of quarrying and mining of rocks and industrial minerals; management of health and safety in mines; policy around extractive industry; maintenance of geological data and resources survey and remote sensing. The two ministries will provide the overall leadership, oversight, guidance and policy direction in the implementation of the sub-sector plan. To this end, the ministries will ensure top management incorporate the projects in their performance contracts, annual work plans and set up committees to report on the attainment of the targets.

2.5 The Role of Parastatals /Semi Autonomous Government Agencies (SAGAs) in the sector The NOCK undertakes oil and gas exploration and marketing and distribution of petroleum products. The Kenya Pipeline Corporation (KPC) manages the oil pipeline for transportation of oil products and Kenya Petroleum Refineries Limited (KPRL) refines imported crude oil for consumption for both local and regional markets. The sector will create a National Coal Corporation which will coordinate exploration and development of coal as an energy mineral. In addition, a National Mining Corporation (NMC) will be established to facilitate exploration, development and management of other mineral resources. During the Plan period, these parastatals/SAGAs are key in the implementation, monitoring and evaluation of the plan and report on the progress made.

2.6 The Role of Private Sector The private sector plays a pivotal role in economic development of this country through investment in economic activities and provision of social amenities. In the oil and other mineral resources sector, private sector is involved in exploration of oil/gas and minerals and mining. Private companies also invest in distribution and marketing of oil/gas and mineral resources. The two ministries will create an enabling environment for the private sector participation in the implementation of the plan, which includes monitoring and evaluation and reporting on progress made. The private sector will participate as independent investments and/or in Public Private Partnerships. x VISION 2030   SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017

2.7 Stakeholders Analysis The oil and other minerals sector has a number of stakeholders who participate in policy formulation, implementation of programmes and projects as well as monitoring the implementation of the programmes and projects in the sector. The stakeholders have varied expectations as summarized in Table 0-1. Table 0‑1 Stakeholder Analysis Stakeholder Stakeholder Expectations Ministry of Energy and • Formulation and dissemination of policies, laws, regulations, Petroleum procedures Ministry of Mining • Generation and accessibility of basic data and information on oil/gas and other mineral resources • Coordination of stakeholders in the oil/gas and other minerals sector • Marketing and promotion of the oil/gas and other minerals • Mobilization of resources • Capacity building Other Government Institutions/ • Timely and accurate information and reports Line Ministries • Revenue generation from mining of oil/gas and other minerals • Provision of data on natural resources/environment and geo- information services • Budgetary support and fiscal regime formulation (The National Treasury) • Strict adherence to laws, regulations and policies to minimize legal tussles (Attorney General office) • Efficient and timely provision of technical services • Collaboration and networking Industry • Affordable energy in the form of oil/gas and oil/gas products • Availability of minerals as raw materials for industries Public/Citizens • Availability of oil/gas products at affordable prices • Timely access to data and information • Equitable sharing of revenues from oil/gas and other minerals • Transparency and accountability • Efficient and prudent utilization of resources • Amicable conflict resolutions • Employment and wealth creation Research and academic • Timely access to data and information institutions • Knowledge management and sharing • Manpower development • Development of appropriate technologies • Collaboration in research and internship VISION 2030 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 1 Private companies/investors • Timely and accurate information and reports sharing • Encouragement and promotion of viable Public Private Partnership • Investment in exploration and mining of oil/gas and other minerals • Efficient and timely provision of commercial technical services • Contract compliance • Private sector forum • Amicable conflict resolutions Professional bodies including • Subscriptions regional and international • Participation in the forums forums • Implementation of resolutions Civil societies (NGOs, FBOs, • Timely and accurate information and reports sharing CBOs etc) • Transparency, accountability, governance • Contract compliance • Collaboration Development Partners and • Financial probity and technical support International Organizations • Timely and accurate information and reports • Collaboration in the implementation of programmes • Transparency, accountability, governance • Contract compliance • Meeting international obligations Parliament • Timely information sharing • Appropriate legislation to govern the sector • Budgetary framework linked to performance • Transparency, accountability, governance County governments • Equitable sharing of resources • Information sharing • Amicable conflict resolution Suppliers & Merchants • Timely information sharing • Transparency in procurement of goods and services • Timely payment for goods and services Media • Reliable data and information Staff (Internal customers) • Training and development • Conducive working environment • Appropriate working tools • Welfare of staff • Better terms and conditions of service

2.8 Current Regulatory Framework Currently the sector is being regulated through: • Petroleum Exploration and Production Act Cap 308 and Energy Act; • The Mining Act Cap 306; • The Trading in Unwrought Precious Metal Cap 309; • The Diamond Industry Protection Act Cap 310; 2 VISION 2030   SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 • The Gold Development Loans Act Cap 311 (moribund); and • The Explosives Act Cap115. These acts are inadequate to reflect modern best practices and hence require review. Other relevant regulatory instruments are the National Environment and Co-ordination Act (EMCA) and Income tax (Amendment) Act. VISION 2030 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 3 3 CHALLENGES AND EMERGING ISSUES There are numerous challenges and emerging issues affecting realization of full potential in the Oil/Gas and Other Mineral Resources Sector. Outlined below are the major challenges and emerging issues:

3.1 Legal, Regulatory and Institutional reform The policies, laws and institutions that presently govern the mineral sector in the country need significant reform if the sector is to grow sustainably and contribute to economic development and poverty reduction in the counties. The highest priority must be given to finalizing the Mining Bill (2013) and Energy Bill (2013). Kenya needs a shared vision of how development of oil/gas and minerals will take place at the counties, building on experiences from across the world. The bills must define the role and mandate of the state and its public institutions in the sector, and make very clear what public institutions at the county level will exercise; what regulatory roles are and the relationships between them; how, if at all, decentralization might apply to governance of the mineral sector; specify the environmental obligations of operators consistent with internationally recognized safeguard standards; define arrangement governing provision for community development and benefits sharing, including roles to be played by different stakeholders; address the rights of vulnerable groups that might be impacted adversely by mineral sector development and measures for their protection.

3.2 Government Revenue Collection The development of a productive and profitable mineral sector can provide a new source of government tax revenues that could be substantial relative to non-mineral revenue sources. It will be important to ensure that the government obtains a fair share of mineral rents but, in doing so, it must strike the right balance between inducing investment at the counties and generating tax revenue. This calls for a fiscal regime for the Oil/Gas and other Minerals sector that takes account of the uncertainty, risks and rewards inherent in Oil and other minerals operations and recognizes that the country, particularly in this early phase of oil and gas sector development, competes for investment with countries that may offer equal or better investment opportunities within the region. It is well known that natural resource exploitation of oil and gas requires extensive investment before it becomes valuable and beneficial to the society. It requires investment in infrastructure, physical capital and knowledge. Thus, investing in knowledge is a legitimate component of a forward-looking economy that will be an ultimate objective of the government.

3.3 Politics, dispute management and environmental issues Oil and gas development faces political and environmental issues. Political issue stem from the overlapping and disputed claims of economic sovereignty. Environmental issues pertain to the preservation of Fauna and Flora species unique to the areas where oil, gas or other minerals have been discovered, particularly Turkana and Kwale. The environmental impact of oil exploration is a dominant driver for most technology development in the industry today. Although much of this effort is focused on waste treatment and disposal, a significant amount of waste prevention will be crucial. Development of technologies to displace less material during mining will result in reduced environmental impact. A long-term vision for the industry would find constructive use for all material removed in the oil drilling area. Kenya has a maritime boundary dispute with Somalia, in the Indian Ocean Waters. There is also gazetted oil and gas exploration blocks that are located in the disputed area offshore the Lamu basin, and resolution of the dispute will be required to avoid resource-fuelled disputes, which are even harder 4 VISION 2030   SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 to mediate than others. The disputed Ilemi triangle between South-Sudan and Kenya also lies in the Tertiary basin stretching over three exploration blocks in that region. Although it takes time to resolve sovereign boundary disputes, it is important that faster solutions are sought to foster confidence with international companies. There has not been disagreement between exploring companies in the country, but the scenario in other countries should be a strong lesson for us, in formulation laws that govern such partnerships.

3.4 Managing Expectations Like most mineral resources, oil exploration and exploitation takes place in the location of the resource and, subsequently, transformations (physical and socio-economic) are bound to occur in the area of discovery as it accommodates this new activity. With such transformations, especially in remote areas where oil and other minerals are, sensitive issues will arise which, if not addressed beforehand, may cause unnecessary tension and civil strife in future. Specifically, different stakeholders have different expectations regarding the economy of the country and especially those in the location where the resource is located. Turkana County has the highest poverty level of about 94 per cent, and is the sixth least densely populated county in Kenya. The county is among the five least developed in terms of infrastructure and other supporting socio-economic facilities. The burning question in the mind of the locals is what the national government will do to ensure citizens (especially those domiciled next to resource sites) have correct information, capacity and expectations to avoid unwarranted anxiety and excitement. Although development of the oil resource will take a few years to commence, there has not been any systematic attempt to establish opinions and expectations of the public, who will be largely affected by the projects. There exist a lot of expectations at different levels of society with respect to the resource, and there has not been any identification of these expectations and ways to manage them. This has the potential of breeding negative sentiments in future, if the unidentified expectations of different groups are not met, and are not managed early enough. Imperatively, the government must take cognizance of the fact that , like any other non-renewable resource, Oil (in general hydrocarbons) could be compared to a capital asset granted to a country for a limited period of time , and it must, therefore be used for the greatest and sustainable benefit of a country. This brings into focus the relevant issue of the government’s general objectives with respect to the hydrocarbon sector. The statement of such objectives by the government would help in drafting laws, regulations and setting up institutions geared towards achieving the stated objectives. Since exploration and development of oil resources are long-term activities, the state should have clear objectives of how to handle both stages before signing any contracts with investors. In most cases a government’s objective regarding exploration and development of natural resources revolve around the issues of sovereignty, economic growth and environmental protection.

3.5 Transparency, Rents Transfer and Rent Seeking Transparency is key to achieving public acceptance of a contract. It is a necessary condition to all civil society and the public to provide an informal mechanism of checks and balances, where formal mechanisms are not adequate. Transparency is the only way to dispel the constant concerns of greed and corruption often associated with mineral contracts, and it prevents government officials from agreeing to the terms that the citizenry may deem unacceptable and subject to constant criticism and attack. Public and private sectors have different interests, which overlap with social welfare. Political stability is fundamental to government, while the private sector is concerned with stable property rights. Thus, the government has two competing objectives that is to maintain stability and to promote VISION 2030 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 5 investment to achieve economic growth. Asset redistribution is central for stability in the counties as devolution takes root. Experiences from other countries show that there is a significant disconnect between mining companies and the local governance structures in the areas in which they are located, resulting in distrust between the local communities and mining companies. The secrecy within which many mining agreements are drafted and signed, and the lack of involvement of the local citizens in decision-making and lack of information regarding the resources has been a major source of mistrust and disgruntlement in the mining sector. Thus, transparence and accountability are important issues for the industry. Transparency includes the disclosure of the terms of contracts and the payments due to both the locals and the state.

3.6 Devolution and Land Issues The ongoing decentralization process that establishes a bottom-up development planning system is a potential avenue to catalyze development of the mineral sector in counties. However, it must overcome the reluctance of the central government to devolve responsibilities and budget to the county administrations, which stems from concerns over weak administrative capacity and lack of effective accountability at the counties. Large-scale mining has a big appetite for land. The land currently used or will be used for mining was traditionally used for agriculture and pastoralism, both being major factors in sustaining local livelihoods, especially those of the Turkana people. Many of the people who are likely to be affected do not know their rights and the amount of compensation they ought to eventually receive a fact that the multinational companies may take advantage of. There is need to develop a clear mechanism of engagement by the mining companies and the local people with elaborate guidelines on land acquisition and compensation.

3.8 Resource Curse and Institutional Set-Up Existing empirical evidence seems to demonstrate without exception that countries that have managed to circumvent the resource curse demonstrate superior organizational settings, with sound institutions or good leadership able to insulate windfalls from political interferences. Weak institutions may lead to wasteful spending or distorted allocations. It is widely recognized that the quality of political and economic institutions, such as the type of property rights arrangements and the quality of state bureaucracy, determines to a great deal whether natural resource rents will be managed to the benefit of the economy and society. This is clearly negatively evidenced by the disappointing case of Nigeria’s Niger Delta. With natural resource wealth such as oil, there can be so much wealth floating around the government that it can be easier to engage in unproductive rent-seeking activities than in creating more wealth. This is the situation Kenya should avoid at all costs. Lessons from around the world emphasize that oil and gas sector growth will need to be managed wisely to avoid mismanagement, inequitable sharing of benefits and disregard of the interests of the environment and communities. Economic policies and public financial management will have to be adapted to take into account the potential magnitude and volatility of mineral revenue flows and decide how revenues might be allocated. Reforms should take advantage of the county devolution process to catalyze sustainable development out of mineral sector growth in counties. However, this will require devolution of responsibilities and budget to the county administrations, coupled with improved administrative capacity and effective accountability.

3.9 Regional Implications The discovery of oil and gas in Kenya has implications and presents new opportunities to chart a 6 VISION 2030   SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 sustainable growth and development path for Kenya. The first implication is that Kenya will now have renewed energy to push for the development of the facilities necessary to transport and export oil, and specifically to build a huge deep-water port on the resort island of Lamu and a pipeline across Northern Kenya to connect to the port. These projects are already underway for South Sudan to export its oil without having to go through Sudan. These projects will need to be fast-tracked. Kenya will also be hopeful its oil will give it greater influence in regional and international affairs. For Kenya’s neighbour, Ethiopia, the discovery of oil in Turkana is of particular interest. The East African Rift Basin, where the oil was found, is divided between Kenya and Ethiopia. If there is oil on the Kenyan side, then there is very good chance there is oil on the Ethiopian side too. We expect exploratory drilling in Ethiopia to gain momentum. If these explorations are successful, Kenya still stands to benefit as land-locked Ethiopia and South Sudan, may need to use Kenyan pipelines and ports to export their oil.

3.10 Other challenges in the sector • Huge financial outlays for exploration and production of oil, gas and other mineral resources hence limited data; • Inadequate funding of the sector Ministries. This constrains exploration and development of minerals; • Limited attraction of capital for exploration and production activities. Before oil/gas and other mineral resources are discovered, the country is considered a frontier and high risk for investments; • Human capacity constraints. There is shortage of specialized local manpower in the field of mining, petroleum geology, geo-physics and reservoir and production engineering; • Inadequate specialized exploration and survey equipment; • Inadequate infrastructure development of the requisite network of roads railways, ports, pipeline, and refining and distribution systems to support the mining and oil sector; • High expectations from host community leading to conflicts; • Low value addition for mineral resources hence low returns; • Environmental and health concerns i.e. derelict land, pollution, use, exposure and disposal of toxic substances, and illegal use of explosives; and • Volatility in international market prices for oil, gas and other minerals.

3.11 Way Forward The recent discoveries of oil, gas and rare earth minerals suggest that these will be potentially important resources for the country going forward. How they contribute to the imperative of job creation and ensure inlcusive and sustainable development will depend on how the country manages the oil and gas value chain. It must be recognized that oil and gas sectors, from examples in other jurisdictions in Africa, generally do not create jobs or allow for inclusive development. They will only do so if accompanied by a matrix of policies, programmes and projects that engender transparency and foster economic diversification. These must be supported by an effective, capable, well-capacitated state and human resource base at all levels of government. There is need to develop a comprehensive Natural Resource Charter based on the Constitution and, leveraging on good practices globally, give it the force of law. It should be adopted by all the 47 county assemblies and endorsed by Parliament to guide the operations of the oil and gas sector as well as the rest of the extractive industries. This will help in ensuring that benefits and costs are shared throughout the whole country in an acceptable manner, and reduce the tensions and conflicts that have been the bane of such efforts globally. While giving prominence to oil exploitation, the country should be cautious given that such resources bring risks in that too many people become locked in low-skill intensive natural-resource-based industries, and thus fail – through no fault of their own – to advance their own or their children’s education and earning power. The oil sector directly generates very few jobs, the bulk of employment is consequently VISION 2030 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 7 from the non-oil economy and the non-oil tradable sector. Therefore, good economic policies will matter to transform rents into sustained growth and create value in the extractive value chain, hence job creation and durable poverty reduction especially in the counties where oil will be mined and given that poverty levels in the region are the highest. The capacity of policy formulation and execution in a coordinated way is thus fundamental. The country context and political economy matter a great deal, but should not be the main driving force behind windfall management, to avoid excessive rent-seeking activities, inefficiency and wasteful spending. 8 VISION 2030   SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 4 PROGRAMMES AND PROJECTS FOR 2013-2017

4.1 Introduction The Second MTP has outlined various flagship projects to be implemented during the period. This chapter presents the strategic objectives, programmes and projects that the sector has prioritized for implementation. The implementation will include the requisite budgetary allocation, human capital, appropriate technology and defined timelines.

4.2. Strategic Objectives The overall goal of oil/gas and other mineral resources sector is to sustain exploration, development and production of oil/gas and other minerals for the benefit and welfare of all Kenyans. The goal is to establish the commercial viability, develop the requisite infrastructure and production in the oil/gas and other minerals sector. This goal will contribute significantly to the ten (10) per cent annual growth targeted to make Kenya a globally competitive middle income economy by 2030. To achieve this goal, the sector players will focus on these key strategic objectives during the MTP II period:

4.2.1 Oil sub-sector The Ministry of Energy and Petroleum will focus on the following strategic objectives to spur economic growth through: • Petroleum exploration, development and production of oil/gas. • Processing, distribution and marketing of oil/gas products; and • Increase electric power generation.

4.2.2 Other Mineral Resources sub-sector The Ministry of Mining will focus on the following strategic objectives to spur economic growth through the minerals and mining sector: • Formulate and implement policies, laws and regulations governing the extractive industry, commercial explosives and geo-information services; • Carry out geological surveys, mineral exploration and deposit evaluation for development, management and audit; • Establish systems and structures for management of mine health, safety and environment; • Undertake assessment, mapping and monitoring of land cover and land use for conservation, planning and decision making; • Develop geospatial data infrastructure for effective collection, analysis and dissemination of mineral, environmental and natural resources information for planning and decision making; • Promote capacity building to improve efficiency, proficiency and productivity in the mining sector and geo-information services; and • Promote commercialization of the mining industry. VISION 2030 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 9

4.3 Flagship Projects

4.3.1 Oil sub-sector The following are the flagship projects for the oil/gas sub-sector as outlined in the Second MTP: • Restructure the institutions within the oil sub-sector i.e. restructure and enhance the National Oil Corporation of Kenya financial capacity to conduct upstream business; • Sub-divide and create new petroleum exploration blocks based on technical data; • Facilitate development of rail and road networks for exploitation of the coal deposits in Mui Basin and other parts of the country; • Enhance primary data acquisition, analysis and interpretation in the open blocks so as to make them attractive to investors; • Establish a national petroleum data centre; • Enhance partnership in data exchange so as to reduce cost in exploration and access to new technology; • Skills development and enhancement of local expertise in petroleum exploration and production through training, technical collaboration with exploration companies and universities; • Develop Logistics and Supply Chain Management for the oil and gas; • Effectively manage the environment and social economic issues; • Develop the LAPSSET corridor which includes construction of 1,400 km of crude oil pipeline from Lamu to Juba in South Sudan, an oil refinery in Lamu, modern oil terminal at Lamu Port, a second pipeline to transport refined oil products to Ethiopian market and construct a pipeline from Lamu to the existing Mombasa/Kampala pipeline; • Develop a policy on management of commercial discoveries of petroleum resources; • Revise the Energy Bill of 2012; • Review and update the Petroleum (Exploration and Production) Act (Cap 308); • Reconstitute the National Fossil Fuels Advisory Committee (NAFFAC); • Acquire specialized survey and exploration equipment; and • Enhance corporate governance in the government institutions charged with petroleum exploration and development.

4.3.2 Other Mineral Resources sub-sector Over the Plan period, the Ministry of Mining will strive to implement the following flagship projects: • Restructure the institutions within the other mineral resources sub-sector; • Conduct a National Airborne Geo-physical Survey; • Conduct mineral exploration and evaluation; • Create a Special Mineral Processing Economic Zones; • Establish an Internationally accredited Mineral Certification Laboratory; • Establish a Mineral Audit Agency; • Facilitate the establishment of Minerals and Metal Commodity Exchange; • Establish a Geological Survey and Research Centre; • Establish a Mineral Sovereign Fund; • Establish a National Mining Corporation; • Establish a National Seismological Network; • Undertake geo-hazard mapping and monitoring; • Enhance partnership in data exchange so as to reduce cost in exploration and access to new technology; • Undertake commercial production of Kwale mineral sands project (titanium); • Develop a single fiscal regime for mining; • Develop a National Mining Policy, Legal, Regulatory and Institutional Framework; • Participate in the Extractive Industry Transparency Initiative • Facilitate establishment of a National Mining Institute • Develop online mining cadastre system 10 VISION 2030   SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 5 SECTOR POLICIES, LEGAL AND INSTITUTIONAL FRAMEWORK

5.1 Introduction For successful exploration, exploitation, development and management of oil/gas and other minerals, the Government ought to put in place sound policies, strong legal and functional institutional framework to coordinate sector players more effectively. This chapter presents the policies, legal and institutional framework needed to drive and govern this sector.

5.2 Reforms in the Legal Framework The sector has been governed by several legal frameworks as described in chapter 2 (section 2.8). These legal provisions need to be reviewed to conform to the Kenya Constitution (2010) and international best practices. The Ministry of Energy and Petroleum is currently reviewing the Energy Policy, Energy Act, Petroleum (Exploration and Production) Act Cap 308 to address the current constitution provisions and best international practice. Similarly, the Ministry of Mining is developing Mining and Minerals Policy and Bill to repeal the Mining Act Cap 306; The Trading in Unwrought Precious Metal Cap 309; the Diamond Industry Protection Act Cap 310; The Gold Development Loans Act Cap 311 (moribund). In addition, the Ministry will develop Commercial Explosives Policy and review the Explosives Act Cap115, Extractive Industry Governance Policy, and develop the Natural Resources Data and Information Policy and Bill.

5.3 Reforms in the Institutional Framework It is noted that past institutional arrangements in oil/gas and other mineral resources sector are inadequately positioned to implement the necessary policies and regulations to facilitate the sector. It should be noted that effective institutional arrangements are pre-conditions for maximizing Kenya’s benefits from oil/gas and other mineral resources.

5.3.1 Oil/gas sub-sector The oil/gas sub-sector entails upstream, midstream and downstream activities. The institutional reforms include: • National Oil Corporation - restructuring the institution to expand exploration programmes and enhance marketing capacity; • Kenya Pipeline Company - restructuring the institution to enhance the capacity and extend the outreach. This is by building a new parallel line and replacing the old pipeline, extending the line to Kampala, and construction of a pipeline within the LAPSSET Project; and • Construction of oil refinery in Lamu and upgrading of Kenya Petroleum Refinery in Mombasa.

5.3.2 Other Mineral Resources sub-sector In the Other Mineral resources sub-sector, the following institutional reforms will be undertaken: • Establish directorates in the Ministry of Mining to facilitate realization of the full potential of the mining sector; • Minerals Resources Development Corporation; • Coal Development Corporation: To undertake all coal related business including exploration, mining and consumption; • Mineral Audit Agency: To establish the true value, quantity and quality of minerals; • Metal and Mineral Commodity Exchange: To attract investment through trading of futures; VISION 2030 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 11 • Value Addition Centres: To process the raw minerals before they are sold/exported; • Internationally Accredited Certification Laboratory: To confirm certain characteristics of a mineral in terms of identification, quality, quantity and value; • National Mining Corporation: Mining Corporation which shall be the investment arm of the National Government in respect to minerals; and • National Institute of Mining: To build human capacity in mining sector. 12 VISION 2030   SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 6 MONITORING AND EVALUATION AND REPORTING

6.1 Introduction The implementation of this sector plan requires the participation and involvement of all stakeholders. It is expected that each stakeholder will carry out respective responsibilities and report on progress made on a timely basis. The stakeholders should be involved in participatory monitoring and evaluation of their programmes and projects. Each stakeholder will be expected to develop comprehensive annual work plans and cost the activities/strategies. It is also expected that stakeholders will report on attainment of the indicators geared towards achievement of the targets.

6.2 Monitoring and Evaluation and Reporting Each ministry involved in oil/gas and other mineral resources sector will constitute M & E Committee to conduct continuous monitoring and periodic evaluation of the Plan. Top management will ensure projects in the plan are incorporated in their performance contracts, and annual work plans and report on the attainment of the targets. Reporting will be done quarterly by the committee and annual reports will be published. VISION 2030 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 13 14

ANNEX 1: IMPLEMENTATION MATRIX Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 VISION 2030   Mil- lions Goal Establish the commercial viability, develop the requisite infrastructure and production in the oil, gas and other minerals sector Strategic Data collection, collation and analysis; enhance partnership in data exchange so as to reduce cost in exploration and access to new technology; skills development and objectives enhancement of local expertise; commercial production of oil and mineral resources; development of the requisite infrastructure National To identify poten- Potential min- MoM 2013 - GoK/DPs 27,000 7,000 5,000 5,000 5,000 5,000 airborne tial mineralized eralized areas 2017 geophysical areas for ground mapped survey follow-up Upgrade To implement Web portal for MoM 2013 GoK/DPs 55 30 5 5 5 5 and annual allow online public access 2017 maintenance of transactional mining cadas- application tre system Geological To increase Geological MoM 2013 - GoK/DPs 89 9 20 20 20 20 survey and geological data mapping of the 2017 research acquisition country SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 Mineral To evaluate Resource evalu- MoM 2013 - GoK/DPs 1,000 100 300 200 200 200 exploration and mineral deposits ation reports 2017 evaluation in the country Mine health, To improve Reduced mine MoM 2013 - GoK/DPs 82 2 20 20 20 20 safety and health and safety fatalities 2017 environment in mines and quarries Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions Geo-hazard To reduce risk Reduced death MoM 2013 - GoK/DPs 50 10 10 10 10 10 mapping and from geo-hazards and loss of 2017 monitoring and contribute property due to to the national geo-hazards disaster platform Purchase of To facilitate ef- Equipment and MoM 2013 - GoK/DPs 2,420 400 550 520 500 500 specialized fective geological tolls purchased 2017 VISION 2030 tools and and mineral data equipment collection and interpretation Hosting of To host SEAMIC Agenda and MoM 2014- GoK/DPs 15 15 0 0 0 0 SEAMIC Gov- Governing Council programme of 2015 erning Council work National geo- To enhance Databases MoM 2013 - GoK/DPs 120 20 30 30 20 20 sciences data access to and developed 2017 and information dissemination of centre geological data and information Mineral audit To value minerals Increased MoM 2013 - GoK/DPs 750 150 150 150 150 150 agency for the purpose of revenue to the 2017 taxation country Mineral To establish an Strengthened MoM 2013 - GoK/DPs 1,150 450 300 200 100 100 certification accredited miner- capacity for min- 2017 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 laboratory al laboratory eral analysis and identification Increased revenue 15 16 Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions VISION 2030   Minerals To promote Regional hub MoM 2013 - GoK/DPs 250 50 50 50 50 50 and Metals awareness on created for trad- 2017 Commodity the potential and ing in minerals Exchange market of identi- and metals Agency fied minerals Mineral To promote and Processed raw MoM 2013 - GoK/DPs 1,750 250 400 400 400 300 Processing develop skills and minerals 2017 Economic value addition Zones Mineral To promote value Gold refinery MoM 2013- GoK 1,000 200 200 200 200 200 Value Addition addition on min- and gemstone 2017 Centers erals to maximize cutting center benefits. National Mining To serve as the National Govern- MoM 2013 - GoK/DPs 1,150 400 300 250 100 100 Corporation investment arm ment investment 2017 of the National in prospecting Government and mining SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 Commercial Ex- To modernize the Draft commer- MoM 2013 - GoK/DPs 94 4 30 30 30 0 plosives Policy commercial ex- cial explosives 2017 and Bill plosive regulatory policy and bill regime Minerals and To modernize Draft minerals MoM 2013 - GoK/DPs 94 4 30 30 30 0 Mining Policy the Mineral and and mining 2017 and Bill mining regulatory policy and bill regime Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions Mineral Sover- To support nation- An account in MoM 2013 - GoK/DPs 500 100 100 100 100 100 eign Fund al savings from Central Bank 2017 mineral revenues to ensure sustain- able and stable income in future National To monitor earth- Six seismic sta- MoM 2013 - GoK/DPs 500 100 100 100 100 100 VISION 2030 seismological quakes tions established 2017 network National Insti- To build local Well trained in- MoM 2013 - GoK/DPs 355 5 50 100 100 100 tute of Mining capacity for min- dustry personnel 2017 ing and mineral industry Natural To develop a Policy document; MoM / DRSRS 2013- GOK/DPs 75 50 10 15 - - Resource Data policy that en- a Natural Re- 2017 and Information sures sustainable source Data and Policy & Bill management of Information Act natural resources SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 17 18 Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions VISION 2030   Development a. To analyse, Created MoM / DRSRS 2013- GOK/DPs 87 13 15 17 20 22 of Natural store, and databases on 2017 Resources dissemi- land use/land Geo-database nate data cover, status and ICT infra- and infor- wildlife/livestock structure mation for populations in sustainable the rangelands, manage- and vegetation/ ment of forest cover environ- ment and natural resources Aerial surveys b. To gener- Mapped spatial MoM / DRSRS 2013- GOK/DPs 262 40 42 50 60 70 for natural ate data distribution 2017 resource as- and in- of natural sessment and formation resources; monitoring in on envi- Mapped the rangelands ronmental wildlife dispersal SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 attributes areas, migratory and status routes/corridors of wildlife/ livestock in the range- lands Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions c. Effective d. To study e. Impacts f. MOM / 2013- GOK/DPs 74 0 15 17 20 22 man- the im- in specif- DRSRS 2017 agement pacts of ic areas of the mining estab- environ- activities lished ment / on the en- and doc- Natural vironment umented Re- and natural VISION 2030 sources resources and socio eco- nomics Surveys for g. To gener- Land use and MoM / DRSRS 2013- GOK/DPs 147 24 26 30 33 34 land use/ ate spatial land cover 2017 land cover data and assessed and assessment information mapped and mapping on land use/land cover and land deg- radation Oil/Gas sub-sector Coal plant at To increase power 600MW KenGen 2013- 2013- GoK/ 20,400 20,400 20,400 20,400 20,400 Kilifi capacity. 2017 2017 DPs SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 Mombasa Coal Evacuation of 100km 400kV KETRACO 2014- Funding 5,040 0 500 2,520 2,020 0 plant –Mari- Mombasa coal double circuit 2017 not yet akani line. plant line con- firmed 19 20 Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions VISION 2030   Development of To increase up Increased oil and MoE&P through 2013- PPP and 52,500 10,500 10,500 10,500 10,500 10,500 the Mombasa stream petroleum gas exploration NOCK. 2017 GoK. Petroleum Trad- services and exploitation ing Hub Construction of To improve supply Modernized KPC 2013 - KPC 30,000 10,000 10,000 8,686 0 0 new Mombasa reliability and pipeline 2016 – Nairobi New safety Oil Pipeline Construction To improve supply Completed KPC 2013- GoK 5,556 1,500 2,028 2,028 0 0 of a parallel Oil reliability and Pipeline 2016 Pipeline from Safety Sinendet to Kisumu Nairobi LPG To promote usage Enhanced LPG KPC 2013 - KPC and 1,500 500 500 500 0 0 Storage, of LPG. accessibility and 2016 Private Bottling and reduced cost Investor. Distribution Facilities SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 Kenya – Ugan- To increase Modernized GOK 2013 - GOK/ 30,000 10,000 10,000 10,000 0 0 da Oil Pipeline supply reliability pipeline 2016 Donor Project and safety Construction To increase Additional Tanks KPC 2013 - GOK/ 2,338 240 524 524 524 526 of additional supply reliability 2017 Donor storage tanks and safety Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions Installation of To improve Pumps installed KPC 2013 - GOK 1,700 500 600 600 0 0 a third pump in efficiency of the 2015 the Mombasa pipeline – Nairobi oil pipeline Expansion of To improve effi- Truck loading fa- KPC 2013- GOK 351 351 0 0 0 0 truck loading ciency at Eldoret cilities expanded 2014 facilities at Depot VISION 2030 Eldoret Depot Installation of To improve se- Integrated KPC 2013- GOK 368 368 0 0 0 0 integrated se- curity within KPC Security System 2014 curity system facilities improved Expansion of To expand retail 20 additional NOCK 2013 - GoK/ 5,250 1,050 1,050 1,050 1,050 1,050 NOCK Market network retail stations 2017 NOCK share opened per year NOCK’s market share stand at 15% by 2018. Procurement of To stabilize oil 1.5 million MoE&P / NOCK, 2013 GoK. 14,000 2,800 2,800 2,800 2,800 2,800 National Stra- industry barrels of bulk KPC -2017 tegic Stocks petroleum prod- of petroleum ucts procured products SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 21 22 Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions VISION 2030   Oil Exploration To discover and Oil from MoE&P, IOCs 2013- IOCs, 255,000 51,000 51,000 51,000 51,000 51,000 and exploitation exploit oil and gas explored wells 2017 MoE&P reserves exploited. 10 exploration wells drilled Establishment To computerize Integrated Data MoE&P 2013- GoK of an Integrated existing manual Management 2017 Data Manage- systems in licens- System devel- ment System ing of petroleum oped businesses, Management. Monitoring and implementation of petroleum Exploration Pro- grammes, licens- ing of petroleum Retail Businesses, licensing of petro- SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 leum logistic fa- cilities businesses & licensing of petroleum road transportation businesses Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions Establishment To enhance anal- Petroleum analy- MoE&P 2013- GoK 500 of a modern ysis of all rock sis enhanced 2017 petroleum samples, cutting analytical Labo- to ascertain the ratory results of petrole- um prospects Development To increase power 87MW Thika MoE&P 2013- GoK 631 87 VISION 2030 of 250MW generation from power plant 2017 Medium Speed medium speed Diesel electric- diesel electricity 80MW Kitengela MoE&P 2013- GoK 80 ity generation generation plants Triumph power 2017 plants plant 83MW Athi River MoE&P 2013- GoK 83 Gulf power plant 2017 Development To increase power 960MW Lamu MoE&P 2013- GoK 960 of 1920MW generation from Coal Project 2017 electricity coal generation 960MW Kitui MoE&P 2013- GoK 960 from Coal Coal Project 2017 Development To increase power 875MW of in- MoE&P 2013- GoK 700 175 of 875MW generation from stalled LNG/IPP 2017 electricity gas generation from Liquefied SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 Natural Gas 23 24 Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions VISION 2030   Redevelopment To improve effi- 175MW of LNG MoE&P 2013- GoK 175 of 175MW ciency of Medium generation 2017 of existing Speed Diesel to Medium Speed LGN Power Plant Diesel to LGN power plants Concessioning To increase Concession MoE&P 2013- GoK of Blocks C & D tonnage of coal contract 2017 in Mui Basin – Kitui County Re-tendering To increase Concession MoE&P 2013- GoK for concession- tonnage of coal Contract 2017 ing of Blocks A&B Tendering of To increase New exploration MoE&P 2013- GoK 31 new blocks tonnage of coal blocks tendered 2017 delineated outside the Mui SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 Basin Development of To increase Infrastructure MoE&P 2013- GoK infrastructure tonnage of coal network devel- 2017 associated with oped coal mining in Mui Basin Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions Revamp NOCK Enhance NOCK’s 3 blocks with MoE&P 2013- GoK 491.9 119 as a Govern- capacity in explo- commercial 2017 ment’s agency ration of oil/gas discoveries of oil in participation and/or gas in Petroleum and Natural Gas Explora- VISION 2030 tions Construction To enhance 1 Combined MoE&P 2013- GoK 371 198 173 of Geo-chem- chemical analysis Laboratory 2017 ical and of petroleum (Geochemical & Petro-physical Petro-physical) laboratory developed Construction To improve data 1 National MoE&P 2013- GoK 36.4 11.8 24.6 of a National & information on Petroleum 2017 Petroleum Data petroleum Data Centre Centre developed Establishment To enhance pro- 1 Drilling Service MoE&P 2013- GoK of Petroleum vision of drilling Unit developed 2017 and Natural services for oil Gas Drilling & gas Services Unit Creation of to increase oil 18 New petrole- MoE&P 2013- GoK 15 3 3 3 3 3 new petroleum exploration um exploration 2017 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 exploration blocks created & blocks gazetted 25 26 Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions VISION 2030   Primary data To collect geolog- 5 open petro- MoE&P 2013- GoK 5 1 1 1 1 1 acquisition in ical & geophysical leum blocks 2017 open blocks data in open enhanced with blocks new primary geological and geophysical data Local Manpow- To improve 98 Officers MoE&P 2013- GoK/DPs To be er Development technical skills trained in 2017 deter- in Fossil Fuel & knowledge in various skills mined (Hydrocarbons) fossil fuel related, but Resource not limited, to Exploration, hydrocarbon Development exploration, and Production development production, civil engineering, au- diting, taxation, petroleum law and petroleum SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 market survey. Construction of To improve trans- 450km, MoE&P 2013- GoK/KPC 30,000 10,000 10,000 10,000 New Mombasa portation of oil 20˝diameter 2017 – Nairobi New new oil pipeline Oil Pipeline and associated infrastructure constructed Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions Development To improve 8 Storage tanks MoE&P 2013- GoK/KPC 52,500 10,500 10,500 10,500 10,500 10,500 of Mombasa storage of oil of total capacity 2017 Petroleum Trad- 800,000MT con- ing Hub structed to ease current storage shortage Construction of To improve trans- 120km, 14˝ new MoE&P 2013- GoK/KPC 5,556 1,500 2,028 2,028 VISION 2030 a parallel Si- portation of oil spur parallel 2017 nendet-Kisumu oil pipeline Oil Pipeline constructed to cater for in- creased demand in Kisumu and beyond. Construction To improve trans- 354km, 14˝ MoE&P 2013- GoK/KPC 30,000 10,000 10,000 10,000 of Eldoret– portation of oil Oil Pipeline 2017 Kampala Oil constructed to Pipeline transport petro- leum products to Uganda, Rwanda and Burundi. SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 27 28 Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions VISION 2030   Installation of a To improve avail- 8 Pumping sets MoE&P 2013- GoK/KPC 1,700 500 600 600 third pumping ability of oil along and all associ- 2017 set at 8 pump- Mombasa-Nairobi ated facilities ing stations Oil pipeline installed (i.e., along Momba- one pump each sa-Nairobi Oil at Samburu, pipeline Maungu, Man- yani, Mtito-An- dei, Makindu, Sultan Hamud and Konza). Oil Exploration To increase avail- 10 production MoE&P 2013- GoK/DPs 255,000 51,000 51,000 51,000 51,000 51,000 and exploita- ability of oil/gas wells drilled 2017 tion. and developed ready for oil exploitation Construction of To improve availa- 2,700 tonnes MoE&P 2013- GoK 1,500 500 500 500 LPG Storage, bility of gas of LPG Storage 2017 SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 Bottling and facilities Distribution constructed at Facilities Nairobi (2,000), Nakuru (150), Eldoret (200), Kisumu (300) and Sagana (50) Construction To improve distri- 44 Additional MoE&P 2013- GoK 2,338 240 524 524 524 526 of additional bution of oil/gas Storage Tanks 2017 storage tanks constructed at at Nairobi Nairobi Terminal Terminal Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions Expansion of To improve effi- 5, Additional MoE&P 2013 GoK 351 351 truck loading ciency at Eldoret loading arms facilities at Depot constructed at Eldoret Depot Eldoret Depot Installation of To enhance 5 Integrated MoE&P 2013 GoK 368 368 integrated se- security in KPC security systems curity systems depots installed; one VISION 2030 in all KPC’s at each of the depots KPC’s depots at Mombasa, Nairobi, Nakuru, Eldoret and Kisumu Expansion of To increase oil/ 20 additional MoE&P 2013- GoK 5,250 1,050 1,050 1,050 1,050 1,050 NOCK Market gas distribution retail stations 2017 share set up per year 15% market share by 2018 Procurement Stabilized oil 1.5 million GoK, NOCK, KPC 2013- GoK 14,000 2,800 2,800 2,800 2,800 2,800 of National industry barrels of bulk 2017 Strategic of petroleum Petroleum prodiu products SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017 29 30 Pro- Objectives Expected Implement- Time Source Total Indicative Budget (KSh. Millions) gramme/ Output/Out- ing Agency Frame of cost Project come Funds (KSh. 2013/14 2014/15 2015/16 2016/17 2017/18 Mil- lions VISION 2030   LAPSSET Oil To increase Crude oil and LAPSSET Author- 2013- GoK/ 900,000 100,000 200,000 200,000 200,000 200,000 pipelines and capacity refined Oil ity/ MoTI/MOEP 2017 PPP Port facilities pipeline, Oil Refinery, Lamu Oil Terminal and port facilities and Extension of the existing Mombasa-Nai- robi pipeline to Lamu. Construction of To increase distri- 12 Oil Storage MoE&P 2013- GoK new Oil Storage bution of oil/gas Tanks with total 2017 Terminal at capacity of 150 Konza City million litres constructed SECTOR PLAN FOR OIL AND OTHER MINERALS 2013 – 2017