Turkana owners encouraged to swap land for pipeline equity

Tuesday, 24 June, 2014

In a nice counterpoint to the land grabbing stresses of today’s Global Witness Liberia press release, we bring you news from Kenya, where landowners in the north of the country have been invited to own part of the proposed Lokichar-Lamu oil pipeline in order to defuse tensions over compensation for the land taken up by the project.

Business Daily Africa has the full story: yesterday, President Uhuru Kenyatta asked Turkana County residents to consider converting their land into equity stake in the pipeline. It’s expected to be up and running by 2019, and will transport crude oil from Turkana 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,” he said to a delegation from the County that paid him a courtesy call at State House in the capital Nairobi. “You can do this by contributing land as shares instead of selling it.” 

There is some risk in taking this route, which, while an innovative idea that could potentially bring considerable benefits to all involved, isn’t necessarily the panacea it might appear. From the article:

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 in the past had to pay millions of shillings to landowners for land acquired compulsorily for public projects, and this pipeline isn’t the only one in the, er, pipeline.  For example, Transport and Infrastructure secretary Michael Kamau recently also confirmed that a minimum of 11,000 acres of land would be compulsorily purchased for the Standard Gauge Railway Project.

From the article again:

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... 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.

[…]

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.

ENDS

http://www.csr21.org/news/risk/global-witness-report-targets-equatorial-...
http://www.businessdailyafrica.com/Uhuru-offers-Turkana-land-owners-oil-...
https://www.google.com/maps/place/Turkana/@2.7951723,35.3599114,8z/data=!3m1!4b1!4m2!3m1!1s0x17835ec9930e52c1:0x61edf66a08eab395
http://www.trademarkea.com/new-standard-gauge-railway-is-a-do-or-die-pro...