Kenya: Lokichar Town’s Star Wanes as Tullow Scales Down Activities
When Tullow Oil discovered crude oil in Turkana County in 2012, the nearby sleepy town of Lokichar was transformed into a vibrant urban centre.
Entrepreneurs, both locals and non-locals, scrambled for once idle land located along the A1 road from Kitale to Juba (South Sudan), dotting the town with modern malls, shops, hotels and entertainment joints.
This was in a bid to take advantage of the increased money that was now in circulation, thanks to hundreds of people who were directly or indirectly employed by the British oil explorer and other companies it contracted.
The economy of the town had for decades been hard hit by banditry attacks, poverty, poor roads and drought.
Good roads that were later built to facilitate petroleum activities created a conducive environment for trade.
Businesses such as fuel stations, transport services, hotels and accommodation facilities, mobile money transfer services, banking agents, entertainment joints, retail and wholesale ventures completely changed the face of Lokichar town.
The cost of land went up with a plot that was previously going for Sh35,000 now being sold at Sh90,000.
But now Tullow Oil has scaled down its operations and is also halting oil transportation using trucks due to poor state of road in Ortum and Sarbit along Lokichar-Kapenguria highway.
As a result, businesses are closing down due to low circulation of money.
Most rental shops are unoccupied while some accommodation facilities are registering zero bookings in an entire week.
Mr Eliud Ekeru who owns Black Gold Kileja confirmed that there is little money in circulation at the moment.
He said his main customers used to be security guards, drivers and suppliers working for Tullow Oil or its contracted companies.
“My life had changed and I bought another piece of land to expand my business. At the moment, despite my rooms currently going for Sh500 a night, I only get about two customers in a week,” Mr Ekeru said.
He now depends on friends who are long distance drivers, non-governmental organisations and government employees for survival.
He said most traders do not have money to pay taxes as they are not selling anything.
He added that the situation has had a negative impact on the county in terms of revenue collection.
“I call upon President Uhuru Kenyatta to intervene as we are really suffering. If the situation has been caused by the poor state of the road, then let it be repaired so that Lokichar town can go back to its normal economic status. If Tullow Oil has moved out, then let another company come in as fast as possible,” Mr Ekeru appealed.
Lokichar Ward Revenue Officer Francis Samal confirmed that tax collection has been hit hard, adding that business activities in the town majorly rely on petroleum activities by Tullow Oil or its contracted companies.
“Many traders are yet to renew their trade licenses. At least 10 businesses, mostly retail and wholesale, have closed down or relocated to other towns,” Mr Samal said.
He noted that when oil operations are at their peak, the monthly revenue collection is always above Sh.400,000.
The current revenue collection is at Sh250, 000 a month with fears it will continue declining.
Mr John Korikel, the proprietor of Black Gold Hotel Lokichar, said that just like most of other business owners in the town, he will be forced to lay off some of his 25 workers and 10 security guards if Tullow Oil does not resume its operations.
He will also be forced to reduce room charges by half.
Mr Korikel said that his hotel, which deals mainly with catering, accommodation and conference services, has 40 air conditioned en-suite rooms. One is charged Sh4,000 to use a room for a night.
He is currently building 12 rooms for regular customers.
“I had started engaging Tullow Oil in a one-year deal for 20 rooms and another sub-contracted company was to take 18 rooms. I was satisfied that the hotel will be full and therefore started constructing 12 more rooms after taking a loan to create more space for my regular customers. I have been forced to shelve this plan since Tullow Oil scaled down its operations and there is no reliable information on when the operations will resume,” he explained.
POLITICIANS ON THE SPOT
The traders say that local politicians lack a well-coordinated approach to ensure there is lasting sustainability of the economy of Lokichar town.
They now say that the town is going back to its sleepy past.
Residents of Lokichar town and nearby villages are still relying on water trucking.
They say this is a very expensive option which only enriches a few people who are contracted to supply the water.
Lack of sufficient and affordable water has also pushed up the cost of construction and catering and accommodation services.