Kenya: Uhuru offers Turkana land owners oil pipeline shares in wayleaves deal

Date of publication: 
23 June 2014

Land owners in northern Kenya have been invited to own part of the proposed Lokichar-Lamu oil pipeline in a move aimed at defusing tensions over compensation for the land taken up by the project.

President Uhuru Kenyatta yesterday asked Turkana County residents to consider converting their land into equity stake in the pipeline which is expected to be ready by 2019. The pipeline will be used to transport the crude oil discovered in the county to Lamu port for export.

“Invest in the pipeline so that you have revenue that will help the community for a long time instead of asking for an upfront payment. You can do this by contributing land as shares instead of selling it,” President Kenyatta told a delegation from Turkana County that paid him a courtesy call at State House, Nairobi.

The delegation led by Senate Speaker Ekwe Ethuro, Turkana Governor Josphat Nanok and Senator John Munyes promised to consult the community with a view to ensure it took advantage of the opportunity.

The proposal marks the first time that the government has come out openly to promote the largely untested idea of using land for equity stake in public infrastructure projects. It would mean landowners choose between compensation in cash or shares in the pipeline for portions of their land taken up by the wayleave.

“We neither have precedence nor a legal framework to guide exchange of land for equity stakes but I think this is an innovative proposal that deserves serious thought,” said Mr Ibrahim Mwathane, chairman of the Land Development and Governance Institute.

The government has previously being forced to pay millions of shillings to land owners as market value for lands acquired compulsorily for public projects. A number of projects envisaged under Vision 2030 are expected to extend over large swathes of community lands.

Last week, Transport and Infrastructure secretary Michael Kamau said at least 11,000 acres of land will be acquired compulsorily for the standard gauge railway project.

The Lokichar-Lamu crude oil pipeline is part of the Sh2.6 trillion Lamu Port Southern Sudan-Ethiopia Transport (Lappset) Corridor project that Kenya plans to build in partnership with the private sector.

Apart from the crude oil pipeline, which runs from Uganda to Lamu, Lappset’s other components include resort cities, airports, roads and railway lines. The project will see the state acquire thousands of acres of land in counties like Turkana, Isiolo, Samburu, Marsabit, Garissa and Lamu.

If communities accept to exchange their land for equity, they will only be receiving dividends on interest (shares) held, enabling the state to channel all the available cash to project development. State House sees the proposal as one way of ending a stalemate over compensation for land, which has been cited as a stumbling block that holds back mega infrastructure projects.

“Don’t make announcements concerning development without bringing local communities on board because that is where suspicion starts,” President Kenyatta said.

Opinion is divided on the profitability of various public projects and their ability to sustain profitable returns over a long period of time. Experts, however, see the proposal to hand communities a slice of such capital intensive infrastructure as one way of defusing tension and reducing resistance towards disruptive public projects.

“I expect that the same way entities make agreements with communities to pay for their land, they can have pacts that guarantee individuals stakes equivalent to the shilling value of the piece of land surrendered for the project,” said Mr Mwathane.

At the State House meeting, Energy secretary Davis Chirchir said the government would soon advertise for a lead consultant for feasibility studies for the pipeline.