The Ministry of Energy of Kenya sent a letter to the World Bank to request technical assistance funded by the Extractive Industries Technical Advisory Facility (EI-TAF) on June 22, 2012. The activities will be phased to meet GoK requirements. The project will include the following activities:
- Design of fiscal and contractual terms for the development of gas reserves. At the outset of the work, seminars will be held with the GoK and other stakeholders to discuss and decide on policy options to be incorporated in the design of the gas terms. Draft changes to the Petroleum Act and model PSC as well as to the relevant fiscal law will be proposed to the GoK. This project will not provide support to the GoK during specific negotiations with the private sector on petroleum agreements. However, as part of this project, terms of reference will be developed that can be used by the GoK to hire independent legal advice during these negotiations when required. A consultant will be hired for this part of the activities.
- Scope out how the GoK can best organize the management and development of the oil and gas sectors in Kenya and receive support from Development Partners (DPs) to maximize the developmental impact for the long-term benefit of the people of Kenya. A World Bank team will assist the GoK to develop a strategic work program of support required along the extractive industries value chain to effectively meet the challenges it will face. The program will be coordinated with the sub-group of Development Policy Grant (DPG) members on Extractive Industries to make optimal use of the strength of each of the members. This strategic support program may include i) ‘Overarching issues’, e.g., strategic vision, transparency and accountability; ii) ‘Decision to extract’, e.g., assessing the resource, local economic, social and environmental impacts; ii) ‘Getting a good deal’, e.g., award of contracts and licenses, legal, regulatory and institutional framework, environmental and safety management; iv) ‘Collecting revenues’, e.g., collection of taxes and royalties; v) ‘Managing the resources’, e.g., macroeconomic management, distribution of revenues; vi) ‘Policies and investment for sustainable development’, e.g., public investment management, promoting private investments; and vii) ‘Cross cutting issues’, e.g., capacity building and working with the private sector.
- Gas sector awareness building by organizing workshops for key stakeholders on the wider aspect of natural gas developments, including safety and environmental dimensions. The workshops will initially be aimed at the members of the inter-ministerial sub-committee of the Government National Fossil Fuels Advisory Committee (NAFFAC). These workshops will be delivered by the WB and/or consultants.
- Legal and policy review. To prevent overlap of donor support, this part of the project will only be executed when, through consultation with other Development Partners (DPs), it has been identified which elements of the legal and policy review should be supported by this project. The inter-ministerial sub-committee of the Government National Fossil Fuels Advisory Committee (NAFFAC) has identified a number of areas in the Petroleum Exploration and Production Act Chapter 308 of the Laws of Kenya enacted in 1986 and the associated Model PSC that require an update. The review may identify further areas for inclusion, such as standard HSE clauses in the Petroleum Act, Regulations and model PSC. The proposed reforms will have to be reflective of the current status as well as anticipated developments of the petroleum sector in Kenya.