Kenya’s planned geothermal royalty scheme to guarantee benefits to local communities

Olkaria II geothermal power plant, Kenya (source: ARGeo)
Alexander Richter Alexander Richter 6 Nov 2018

Under the new royal scheme for geothermal operations in Kenya, local communities could benefit receiving a share of the revenues generated through the scheme.

In February 2018, we reported on plans to create a royalty fee system on the utilisation of geothermal resources, calculated on the revenues achieved from geothermal power operations in Kenya.

Now, the new Energy Bill, which completed public consultation in February this year, concretely lays out a schedule for royalties on geothermal energy utilisation.

In an article by Oxford Business Group, a few more details on the legislation can be found. Tailored to securing new sustainable revenue streams for the government of Kenya, but also to guarantee income by the different countries in proximity of geothermal operations from the scheme.

The new scheme aims at setting up royalties to be paid between 1% and 2.5% of the revenues generated from geothermal energy sources during the first decade of operation and 5% thereafter.

The exact rate will though create a strong debate, as it will also effect interest of international investors that Kenya needs to fund development.

The now proposed royalty reforms, will provide local communities near geothermal operations about 5% of revenues derived from royalty payments by operators. The establishment of trust funds managed by trustees is to guarantee transparency in the management of the income.

For further details see link below.

Source. Oxford Business Group