Listen to This Article Enhance your reading experience by listening to this article.

Conflicts over revenue sharing between national and county governments on natural resource exploitation will be a thing of the past if a bill before the Senate is passed.

National Resources (Benefit Sharing) Bill, 2022 sponsored by Danson Mungatana (Tana River) proposes the sharing of the revenue of natural resources in the ratio of 60 per cent to the national government and 40 per cent to county governments.

It seeks to provide a legislative framework for the establishment and enforcement of a system of benefit sharing in natural resource exploitation between natural resource exploiters, the national government, county governments and local communities.

The bill, which has been introduced for first reading at the Senate, also seeks to give more powers to Commission for Revenue Allocation (CRA) to oversee the benefit sharing among the entities.

Kenya Revenue Authority (KRA) shall declare and account to the Commission the total sum collected from affected entities with respect to each natural resource as provided for under the Act.

“The revenue collected shall be shared on the basis of 20 per cent of the revenue collected shall be paid into a sovereign wealth fund established by the national government,” reads part of the bill.

Futures fund

It proposes that 80 per cent of the revenue collected shall be shared between the national government and the concerned county government in the ratio of 60 per cent to the national government and 40 per cent to the county governments.

The proposed law further states that 60 per cent of the money paid into the sovereign wealth fund shall be paid into a futures fund and 40 per cent paid into a natural resources fund.

Mungatana’s proposal wants at least 40 per cent of the revenue assigned to county governments be utilised to implement local community projects and 60 per cent of that revenue be utilized for the benefit of the entire county.

He proposes that CRA will, in consultation with the Council of County Governors (CoG) and relevant national government entities, determine and review the amount of royalties and fees payable by affected entities in respect of a particular sector where a written law does not prescribe the royalties or fees.

It says the commission will be responsible for the co-ordination of the preparation of benefit sharing agreements between an affected county and an affected entity, review, and where appropriate, determine the royalties payable by an affected entity engaged in natural resource exploitation.

Collect royalties

The Commission will also be responsible for the identification of counties that are required to enter into a benefit sharing agreement under the Act in consultation with the respective county governments and to oversee the administration of funds set aside for community projects to be implemented under a benefit sharing agreement.

It further proposes that the commission will oversee the establishment of benefit sharing committees and forums, ensure the proper and timely payment of funds to counties and local communities and build the capacity of local communities in negotiations for benefit sharing and implementation of related projects.

“The Commission may, in furtherance of its functions, collaborate with such other bodies or organizations within or outside Kenya as it may consider necessary for the better performance of its functions under this Act,” reads part of the bill.

KRA shall collect royalties as determined by the Commission under Section Six from affected entities and any other payment of royalties from natural resource exploitation undertaken under any other written law.

“The monies collected pursuant to this section shall be paid into the Fund. This section shall supersede the provisions of any law with respect to the collection of royalties and fees charged for the exploitation of natural resources in Kenya. KRA shall declare and account to the Commission the total sum collected from affected entities with respect to each natural resource as provided for under this Act,” the bill reads in part.

It also states that where natural resources bestride two or more counties, the Commission shall determine the ratio of sharing the retained revenue amongst the affected counties in consultation with the counties.

In determining the ratio of sharing the retained revenue among counties sharing a resource, the Commission shall take into account, the contribution of each county in relation to the resource, the inconvenience caused to the county in the exploitation of the natural resource and any existing benefit sharing agreement with an affected entity.