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{
"id": 212710,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/212710/?format=api",
"text_counter": 34,
"type": "speech",
"speaker_name": "The Assistant Minister for Energy",
"speaker_title": "",
"speaker": null,
"content": "(Mr. Kiunjuri); Mr. Speaker, Sir, before I reply, I beg that I will give a lengthy answer. (a) By an agreement signed in 1999, the two governments agreed that Kenya would be awarded a term contract to lift 30,000 barrels of Nigerian crude oil per day at an official selling price. You may wish to note that the official selling price fluctuates from time to time depending on the international crude oil market rates. These are the same terms offered to all countries with similar bilateral arrangements with Nigeria. You may also wish to note that under OPEC regulations, member countries like Nigeria are not permitted to offer crude oil to any other country at concessionary terms. The actual oil barrels received under this agreement is, however, dependent on availability and always subject to monthly nominations by the Nigerian National Petroleum Corporation. This agreement is also applicable to Kenya. The texture of the crude oil obtained from Nigeria known as bony light is not suitable for refining at the Kenya Petroleum Refineries Limited due to incompatible technical specifications. For this reason, Kenya is not in a position to refine this crude oil for home use. Consequently, the Government decided that the said crude shall be traded in the international market and any commercial benefits used on petroleum related activities. Due to capacity limitations, the Kenya Government appoints through an open tender system, qualified international oil traders to lift and trade the crude oil on its behalf and, thereafter, receive 2652 PARLIAMENTARY DEBATES July 19, 2007 commission for every barrel lifted. The total revenue received is, therefore, dependent on the total number of barrels lifted as per the nomination by the Nigerian National Petroleum Corporation and the prevailing commercial rates per barrel as agreed in the tender. Mr. Speaker, Sir, it is, therefore, incorrect to say that the crude is obtained for free from the Nigerian Government as suggested by some hon. Members. It is also incorrect to say that we lift the crude oil at a lower rate than the market rate. In the 2006/2007 Fiscal Year, we had five crude oil cargo liftings totalling to 4,717,517 barrels, representing a performance rate of 42 per cent. The commission during this year was US Cent 15.1 per barrel. This is a comparison to the five cargoes in the 2005/2006 Fiscal Year, totalling to 4,678,538 barrels, which was also a performance rate of 42 per cent. The commission per barrel was US Cents 15.1 per barrel. In the 2004/2005 Fiscal Year, there were six cargoes lifted, totalling to 5,388,364 barrels, representing a performance rate of 50 per cent. The commission during this year was US Cents 7 per barrel for the first three cargoes and US Cents 13 for the next three cargoes. It is evident, therefore, that the commission per barrel has been increasing progressively since the 2004/2005 Fiscal Year to date. It is also evident that the barrels lifted in the 2006/2007 Fiscal Year were less because there were fewer liftings than the previous years. Secondly, you may also wish to note that the exchange rate against the Kenya Shilling was higher in the other two years than in the 2006/2007 Fiscal Year. Finally, the bid documents for the Nigerian crude lifting had other considerations relating to technical capabilities and whoever was most responsive was asked to march the highest price offered in the tender. Kenya, therefore, earned the highest commission ever recorded to date, during this fiscal year. The tender documents concerned are available for scrutiny."
}