National Energy Policy - Final Draft - 14 Nov 2013

10.0 – ANNEXURESAnnex 10.1 The PSC Model Fiscal Structure(a) Area:(b) Exploration:(c) Production:(d) Relinquishment:(e) Exploration Obligations:(f) Training Fees:(g) Surface Fees Rental:(h) Taxation:(i) Corporate Income Tax:(j) Depreciation:(k) Ring fencing:(l) Government Participation:(m) Profit Oil Split:(n) Cost Recovery Limit:Specified Block size is provided with its coordinates.Phases – Initial Exploration –2yrs, First Additional –2yrs; SecondAdditional 2yrs; Total 6 years.20 to 30 years, (typically at least 25 years).25% of original area, after 1 st Phase, 25% of remaining area after2 nd Phase (Negotiable).Includes geological and geochemical surveys, reinterpretation ofavailable data, technical data acquisition and well drilling with aminimum exploratory depth of 3000m and minimum negotiableexpenditure.this is based on an agreedlump sum amount payable annuallyduring exploration, development and production periodsthis is based on an agreed amount per sq km for the block sizebasis and divided into exploration, development and production.Under the Kenya Model, taxes are paid “in lieu” – “for and onbehalf of the Contractor” out of the Government share of profit.this in Kenya is at 30% while the world wide average is between30-35%.the model uses a 5 year Straight Line Depreciation method forcapital costs. The depreciation begins “when production starts.”It does not allow costs from one block to be recovered fromanother.The Kenya Model PSC requires a minimum Governmentparticipation of 10%. The Government share is carried throughexploration and paid in full during production.Based upon a production-based sliding scale system. ApplicableTranches are Negotiable.this is based on negotiated gross revenues and lies well withinthe World Average of 60%.133 10.0 – ANNEXURES