Kenya reaps first billion from oil exports but economic forecast remains cloudy
Kenya has earned its first billion shillings from oil exports from the Turkana facility. But analysts say the milestone has been overshadowed by a cloud of economic gloom.
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Kenya made 9 million euros from the sale of 240,000 barrels of oil produced at the Turkana oilfields, according to the National Bureau of Statistics.
But the country may well be paying more than it earned to meet the costs of transporting the oil to a terminal in Mombasa County where it is exported.
Tullow Oil, Kenya’s partner, is also eager to start recovering the over 1.8 billion euros it invested in exploration operations alone, an indication that Kenyans will have to wait for a while longer before being invited to the oil party.
“There is a lot of excitement about our entry into the League of nations of oil exporters," says Moses Ikiara, executive director of the Kenya investment authority (Keninvest).
But the economist notes that despite the impatience and high expectations for immediate transformation, there is need for restraint because the pipeline to Mombasa still has to be constructed.
The Kininvest CEO says the first billion shillings has been deposited in a sovereign fund opened at the treasury from where it is managed along the lines of Kenya’s normal formula for the sharing of the budget a fait pre-determined criteria.
According to breakdown made public by petroleum principal secretary Andrew Kamau, 75 per cent goes to the national government, 20 percent to county governments and five percent for to communities.
Moses Ikiara expressed optimism that the windfall accruing from oil sales will strengthen Kenya’s affirmative action in terms of development.
The Keninvest chief plays down China’s emergence as the leading client waiting to buy the bulk of Kenya’s 500 million barrels of oil lying in the underbelly of Turkana country.
This was after Chinese firm ChemChina bought the first cargo of the Kenyan crude, after outbidding seven other refineries from Europe and Asia.
Kenya’s debt burden towards China increased to SH860 billion (7.6 billion euros), an increase of 863 million euros this year alone.
“Frankly speaking, I think people panic unnecessarily, because our oil is being produced by Tullow Oil – which is not a Chinese company.
"I don't see a situation where the level of what Kenya owes China could come into the equation. It’s a matter of who is offering the best price for the product, that we have," the Kenya Investment Authority CEO reiterated.
Itw Executive Director KenInvest discusses Kenyans' wait for oil money
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