National Energy Policy - Final Draft - 14 Nov 2013

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2. Exploration and production of natural gas is highly capital intensive.3. Inexistence of gas infrastructure to support gas discovery and development.4. High cost of gas infrastructure both offshore and onshore.5. Inability to disaggregate into component elements of supply chain e.g cost of wholesale Gas,transportation and distribution in order to price the gas.6. Inherent weaknesses in Cap. 308 and the model PSC which include lack of provisions for:(a) Gas sharing terms.(b) Environmental protection, conservation and management.(c) Inadequate policy in profit gas revenue sharing and management.7. There is no world gas price like in the case of oil.8. Inadequate manpower, technical capacity and local content in gas exploration and productionactivities.9. Lack of gas master plan.10. Potential for Gas flaring especially from oil producing fields. Gas flaring is a practice that is mostoften linked with the simultaneous production of oil and natural gas where there is no readymarket for the gas. This is performed by safely burning off the associated gas. This approachwas historically accepted as industry standard; however the increasing focus on the impact of oiland gas production on the environment, combined with the increasing value of gas, makesindiscriminate flaring untenable. However, there are instances when it is necessary to flareassociated gas production. This is normally in relation to preventing excessive pipeline pressureand/or in response to a specific emergency (such as equipment failure).2.3.6.2 Challenges in Natural Gas1. Lack of a regulatory framework for natural gas development and production.2. Lack of infrastructure for exploitation and use of natural gas, such as LNG liquefaction plants,natural gas pipelines, etc.3. Lack of legal regulatory and fiscal framework to facilitate the export options as the easiest andquickest option to monetize natural gas discoveries.4. Lack of facilities to exploit natural gas reserves, e.g., power plants, petrochemical plants, andfertilizer plants.5. Lack of infrastructure for supply to commercial, industrial and residential consumers.6. Lack of gas master plan.2.3.6 Policies and Strategies - Natural GasPolicies and StrategiesImplementation Plan36 NATIONAL ENERGY POLICY FINAL DRAFT NOVEMBER 2013
Natural GasShort Term2014-2017Medium Term2014-2022Long Term2014-20301. Develop a Gas Master Plan and a policy that identifies prioritydomestic sectors for gas utilization and, provided sufficient volumesare discovered, will allow gas to be separated and exported atinternational market prices.2. Develop the gas sector by: ensuring the safe supply of gas to endusers; attracting investment in the sector by establishing atransparent and efficient legislative framework that encouragesupstream and downstream development and enables long terminvestment; promoting private sector participation in all parts of thegas chain and establishing a regulatory framework (EconomicRegulation, Negotiated Access and Operational Regulation)according to international norms.3. Enhance local expertise in gas exploration and production throughtraining, technical collaboration with exploration companies anduniversities and research institutions.4. Promote gas exploration both onshore and offshore and supportprivate and public investments through provision of requisite fiscal,legal and regulatory framework.5. Put in place mechanism for gas infrastructure development in underPPP arrangements to promote exploration and development.6. The Government shall develop prior plan to support drilling ofproduction wells, re-injection wells, and the necessary infrastructuresuch as gas processing plants, pipelines and storage facilities.7. To facilitate efficient use of capital and Government oversight, asegmented fiscal structure covering the upstream, midstream anddownstream shall be adopted. The upstream shall be subject to thePSC regime while the midstream and downstream activities shall beheld in separate entities outside the PSC and subject to generalCorporate Income Tax.8. Adopt a transfer pricing mechanism to address the possibility of taxavoidance by affiliated parties in the gas value chain, based oninternational best practice guidelines for transfer pricing.Commercialization of gas requires mechanisms to be provided totake into account elements of supply chain which shall consider thevalue of natural gas upon discovery, development, processing andthe market for end products in order to determine the pricing.9. Facilitate industries to exploit supplies of natural gas based onmarket studies of priority markets.10. Initiate networks to supply residential and commercial consumerswith clean and reliable natural gas.11. For Gas to liquids (GTL) the policy shall be to allow the technologyto be commercially proven before adoption locally.37 2.0 – FOSSIL FUELS
Page 1 and 2: NOVEMBER 2013 DRAFTREPUBLIC OF KENY
Page 3 and 4: 2.4.4.1 Challenges in Coal explorat
Page 5 and 6: 4.5.5 Policies and Strategies and I
Page 7 and 8: Table 10.1 Energy Generation Potent
Page 9 and 10: FOREWORD BY THE CABINET SECRETARY F
Page 11 and 12: EXECUTIVE SUMMARY1. This policy doc
Page 13 and 14: 14. To enhance exploitation of the
Page 15 and 16: 24. The Government shall establish
Page 17 and 18: 1.0 - INTRODUCTION1.1 THE ROLE OF E
Page 19 and 20: (k) Promote appropriate standards,
Page 21 and 22: (e) The Weights and Measures Act, C
Page 23 and 24: fund, mobilizing resources for rura
Page 25 and 26: 2.0 - FOSSIL FUELS2.1 BACKGROUND1.
Page 27 and 28: immense value through acquisition o
Page 29 and 30: and averaging at more than US$110 p
Page 31 and 32: town of Mombasa, through Nairobi to
Page 33 and 34: 3. The prices in Kenya as published
Page 35 and 36: 6. It is hoped that the discovery o
Page 37 and 38: (c) High sulphur levels have advers
Page 39 and 40: Policies and StrategiesPetroleum Ex
Page 41 and 42: Policies and StrategiesPetroleum Su
Page 43: plants has several advantages over
Page 47 and 48: 3. The introduction of clean coal t
Page 49 and 50: 6. Lack of a special purpose vehicl
Page 51 and 52: Policies and StrategiesFossil Fuels
Page 53 and 54: 4. Geothermal power plants use stea
Page 55 and 56: about 1,450MW remains unexploited.
Page 57 and 58: 8. Ownership of physical dam reserv
Page 59 and 60: (d) Competing interests between dev
Page 61 and 62: 3.4.2 Challenges1. Unsustainable us
Page 63 and 64: 4. Land will need to be set aside f
Page 65 and 66: Limited in Kilifi County generates
Page 67 and 68: high temperatures estimated at 4-6
Page 69 and 70: Policies and StrategiesSolar Energy
Page 71 and 72: 3. Inadequate wind regime data.4. L
Page 73 and 74: through co-generation and bioethano
Page 75 and 76: (d) 1 sea wave energy projects with
Page 77 and 78: 3.12.3 Policies and Strategies and
Page 79 and 80: 4.0 - ELECTRICITY4.1 BACKGROUND1. E
Page 81 and 82: 2. It is estimated that as at 2013,
Page 83 and 84: Figure 4.2 - Evolution of the Energ
Page 85 and 86: (e) Thermal power plants have a rel
Page 87 and 88: 6. Nuclear fuel can be recycled and
Page 89 and 90: Policies and StrategiesNuclear Elec
Page 91 and 92: Table 4.5 - Planned Regional Inter-
Page 93 and 94: to this worsening situation leading
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4.5.5 Policies and Strategies and I
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Policies and StrategiesRural Electr
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Policies and StrategiesElectricity
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7. The energy policy and the Energy
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6.0 - LAND, ENVIRONMENT, HEALTH AND
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6.2.3 Renewable Energy1. Generally,
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causes indoor air pollution leading
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6.5 DISASTER PREPAREDNESS AND MITIG
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from the licensee.Policies and Stra
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Policies and StrategiesEnvironment,
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6.7.4.4 Nuclear ElectricityPolicies
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of the risk levels.Policies and Str
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6 It is a further requirement under
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Policies and StrategiesAccess to En
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Kenya.Policies and StrategiesEnergy
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15. Seek financing of clean energy
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Figure 8.1 - Pass-Through Costs in
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Table 8.1 - Energy Tariffs and Cost
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Policies and StrategiesEnergy Prici
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Policies and StrategiesCross Cuttin
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3. In 2009, ERC established a commi
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9.3.3 Policies and Strategies and I
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9.7 ENERGY RESOURCES BENEFITS SHARI
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10.0 - ANNEXURESAnnex 10.1 The PSC
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Table 10.3 Nuclear electricity gene
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Table 10.4 Summary of the Energy St
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County Population Area (km 2 ) Foss
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ACRONYMS AND GLOSSARY OF TERMS1. AC
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RD&DREAREPRMSSMRsSAPPToEVATWpResear
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Reticulation means the network used
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National Energy Policy - Final Draft - 14 Nov 2013

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