Introducing Local Content Regulation in Kenya’s Economy: a Case Study of Kenya’s Energy, Oil and Gas Sector

Abstract

This study explores Kenya’s proposal to implement local content regulations in its energy oil and gas sector, beyond politics and rhetoric. It investigates what needs to be done after all the fancy conferences and charismatic speeches by politicians. What needs to be in place practically in Kenya to implement local content policies? This paper investigates the existing legal and socio-economic environment within which Kenya seeks to introduce local content regulation in its energy, oil and gas sector. Having recently discovered commercially viable quantities of oil and gas; Kenya is determined to ensure that its fingers are not burned by the proverbial African „resource curse” but rather that actual socio-economic development is achieved from the extraction and exploitation of Kenya‟s natural resource. However as these local content regulations are promulgated, industry players and the government must ask one question. Is Kenya‟s legal space, infrastructural, socio-economic and educational space ready to foster the capacity development that is required locally prior to implementation of the local content regulations? Is Kenya ready? What existing legal regimes, infrastructure, socio- economic security and education systems are needed to lay the foundation for the successful implementation of local content regulations? This study was conducted through a series of interviews and focus groups of strategic key players, government officials, local entrepreneurs and international investors in Kenya‟s energy oil and gas sector as well as an analysis of secondary data such as journals, statutes, books, reports and audits. This study hopes to inform the Government of Kenya and policy makers on how best to implement these local content regulations, and what (if anything) needs to be done or implemented prior to the promulgation and adoption of local content regulations in Kenya‟s energy oil and gas sector. It analyses the existing and proposed legal R50/63843/2010

framework for local content regulation in Kenya, as well as the infrastructure currently in Kenya in terms of electricity, water, roads it also looks at the education system, the ease of registering and doing business in Kenya, social acceptance of foreign investors, the tax regime in Kenya, as well as the existing efforts to develop Kenya‟s technical capacity such as the World Bank -Kenya Petroleum Technical Assistance Project (KEPTAP).