Petroleum sector initiatives driving change

Kenya’s petroleum sector is a cornerstone for the nation’s economic growth, energy security and industrial advancement.

The government has crafted and implemented strategic programmes across the segments of this industry. Complementing these efforts are initiatives to champion clean cooking solutions and prioritising affordability and sustainability for its citizens.

Kenya’s upstream petroleum sub-sector has demonstrated substantial growth over time, navigating various challenges along the way. Prominent among these is the global paradigm shift towards renewable energy sources, driven by climate change that has significantly dampened investor interest and thus slowed down exploration activities.

Nevertheless, the move towards exploitation of our critical upstream resources remains on course, underpinned by a renewed focus and strategic re-evaluation. In light of this, the Petroleum Department has embarked on a comprehensive ranking of exploration blocks to attract much-needed investments.

Upon assuming office in September 2022, this administration was confronted with a myriad challenges, including a significant disruption in the supply of petroleum products. This culminated in the government-to-government initiative for the importation of bulk petroleum products.

This innovative framework empowered our oil marketers to trade in Kenya shillings, thereby reducing demand for dollars. This immensely contributed to the stability of our local currency against the dollar.

Additionally, the deal granted favourable credit periods of 180 days for our marketers, while also ensuring negotiable and predictable premiums for our products. Today, the country enjoys a stable supply and has not experienced a stock-out for the past 18 months.

One of our paramount priorities is to ensure that all Kenyans have access to affordable and clean cooking solutions. Liquefied petroleum gas (LPG) is a viable alternative energy source in the transition to cleaner energy solutions. It has emerged as the most preferred cooking fuel and is currently the fastest-growing sub-sector.

We have made a deliberate decision to remove Value Added Tax on LPG to promote its adoption, accessibility and penetration to the last mile, specifically to replace the pervasive use of biomass and other polluting fuels.

Clean cooking energy 

Our LPG growth strategy, which endeavours to achieve 100 per cent access to clean cooking energy by 2028, is being implemented through multiple initiatives designed to address the existing barriers to penetration across the entire value chain. These initiatives include a review of the LPG policy and regulatory framework. We seek to develop a robust regulatory regime that will streamline and guide the growth of the sector while ensuring the utmost safety and security for consumers and the public. The Energy and Petroleum Regulatory Authority, supported by the Attorney-General, has concluded the development of the policy and all relevant regulations in this regard.

One of the critical hindrances to LPG growth in the country has been the insufficient and inefficient LPG storage and handling infrastructure. Robust medium-to long-term interventions have been put in place to address these challenges in partnership with private sector investors.

Firewood

The LPG for public institutions of learning is another key initiative. A recent study conducted by our team in collaboration with the Ministry of Education revealed that out of approximately 9,000 public learning institutions, 97 per cent still rely on firewood as their primary source of fuel. This dire situation underscored the government’s strategic resolve to urgently transition our schools to LPG.

One of the most glaring barriers to LPG penetration among households in the country remains the affordability and accessibility of equipment, including cylinders. It is against this backdrop that the initiative to distribute subsidised cylinders and accompanying accessories to less privileged households was conceived.

Reticulation of LPG in affordable housing projects is another initiative meant to drive adoption. These housing units will serve as best practice models in LPG consumer facilities. The recently launched units in Mukuru, for example, are reticulated with LPG.

We are proud trailblazers in the continental petroleum trade. Our innovative best practices and industry discipline continue to be admired and emulated across the continent. For instance, the G-to-G initiative is being benchmarked by numerous countries, including Malawi, Rwanda, South Sudan and the Democratic Republic of Congo.

The government has diligently put in place comprehensive policy measures and requisite legal frameworks to ensure the sustainable growth of the oil and gas sector. We actively encourage both local and international investors to take advantage of the opportunities available. We have an unwavering commitment to transparency, efficiency and fostering investor confidence.

The writer is the Principal Secretary for Petroleum.