Introduction

The State Department of Petroleum’s Vision is “To explore, develop and produce the petroleum reserves existing in the country’s sedimentary basins for sustainable national economic development and wealth creation”.

The Mission is “To enhance self-sufficiency and security supply of petroleum products for reduction of total Import Bill and to increase foreign currency reserves thereof spurring industrial development and equitable improvement of the standard of living of Kenyan citizens”.

1.1      Strategic goals/ Objectives

The main goal is “To facilitate availability of sufficient, secure, efficient and affordable clean energy by 2030”, To achieve this goal, the following are the objectives of the State Department of Petroleum

  1. Strengthen the Policy, Legal and Institutional framework for the Petroleum development and accelerating the speed of completion of projects;
  2. Oil/Gas and minerals sector capacity development;

iii.        Improve access to competitive, reliable and safe supply of petroleum products to all Kenyans;

  1. Promote Sustainable petroleum reserves;
  2. Promote Efficient utilization and conservation of oil and gas;
  3. Promote Exploration and development of fossil fuel resources;

vii.       Optimal utilization of both human and financial resources.

viii.      Explore alternative financing models for Petroleum sub-sector   projects.

  1. Enhance Public-Private Partnerships in the provision of oil and gas facilities and services;

1.3      Sub-sector Mandate

The Sub-Sector’s mandate as contained in the Executive Order No. 1 of May, 2016 on the Organization of the Government of the Republic of Kenya are: –

  1. Petroleum Policy.
  2. Strategic Petroleum stock management.

iii.        Management of Upstream Petroleum Products Marketing.

  1. Oil and Gas Exploration Policy Development.
  2. Oil and Gas Sector Capacity development.
  3. Petroleum products, import/export/marketing policy Management.

vii.       Licensing of Petroleum Marketing and Handling.

viii.      Quality Control of Petroleum Products.

1.4      Autonomous and Semi-Autonomous Government Agencies

The SAGAs under Petroleum sub sector and their mandates are listed below:

(i)         Kenya Pipeline Company(KPC), established in September 1973 under the Companies Act Cap 486, KPC is 100% owned by the government with its mandate being to provide effective, reliable, safe and cost-effective means of transporting petroleum products from Mombasa to the hinterland.

(ii)        National Oil Corporation of Kenya (NOCK) is 100% state-owned corporation established in 1981 and became operational in 1984. Its mandate is oil and gas exploration, importation and sale of petroleum products in order to provide stability in the market. The corporation is also envisaged to be the investment arm of government in the development of oil and gas fields.

(iii)       Kenya Petroleum Refineries Limited (KPRL) is 100% state owned limited liability company with its original business being refining of crude oil.  Previously, the Company was co-owned on a 50-50% shareholding basis by GoK and Essar Energy Overseas Limited. However, Essar exited in 2016 after the refinery ceased refining operations in September 2013. It changed its model from refining to hospitality for storage and handling of refined petroleum products.

 

1.5      Roles of Sub-Sector Stakeholders

 

The sub-sector recognizes the roles played by various stakeholders in promoting the development, use and coordination of Petroleum services. Key Stakeholders and their roles in the Petroleum Sub-Sector include: –

  1. Energy Regulatory Commission (ERC): –. ERC was established under Energy Act No. 12 of 2006 as an independent regulatory agency. It has the responsibility for economic and technical regulation of electric power, renewable energy, and downstream petroleum sub-sectors. Its functions also include tariff setting, review, licensing, enforcement, dispute settlement and approval of power purchase and network service contracts.
  2. Energy Tribunal: – This quasi-judicial body was established under section 108 of the Energy Act, 2006. It came into operation in July 2007 to primarily hear appeals against the decisions of ERC.  It also has jurisdiction to hear and determine all matters referred to it relating to the petroleum sub sector.

iii.        Independent Power Producers (IPPs): – are private companies which generate power and sell electricity in bulk to Kenya Power as the electricity off taker, distributor and retailer.

  1. Oil Marketing Companies (OMCs): – these are local and international companies licensed to undertake the importation, storage, wholesale, export and retail of petroleum products.
  2. International Oil Companies (IOCs): – are local and international companies licensed to undertake exploration and production of oil and gas.
  3. Service Companies: – are local and international companies offering auxiliary services (Geological and Geophysical data acquisitions, processing & interpretation; logistics and drilling) to IOCs.

vii.       Supplycor Kenya Limited: – this is a registered company, that coordinates the supply activities of oil marketing companies in Kenya.

viii.      Centre for Energy Efficiency and Conservation (CEEC): – established jointly by G.o.K and the Kenya Association of Manufacturers to champion energy conservation and efficiency. The centre through government and donor funding undertakes energy efficiency audits in industries on utilization of all forms of energy.

  1. Petroleum Institute of East Africa (PIEA): – is a voluntary membership institution patronized by among others the major oil companies. It plays a key role in capacity building and awareness creation in the petroleum sub-sector.

 

  1. Other key players in the Petroleum sub-sector include; National Environmental Management Authority (NEMA), Kenya Railways Corporation (KRC), Kenya Truckers Association (KTA), Kenya Association of Manufacturers (KAM), Kenya Maritime Authority (KMA), Kenya Private Sector Alliance (KEPSA), National Construction Authority (NCA), Kenya Civil Aviation Authority (KCAA), Kenya Airports Authority (KAA) and other energy services users. The sub sector plays a key role in capacity building for effective and efficient management of petroleum resources and products.