Cama pens JB on Nigeria oil deal funds

The Consumers Association of Malawi (Cama) has written President Joyce Banda demanding explanation on money Malawi earned from crude oil deal it signed with Nigerian government in May 2012.

Malawi and the State-owned Nigerian National Petroleum Corporation (NNPC) signed a crude oil deal on May 16 2012 and were to expire on April 30, 2013 following Nigerian government’s promise to donate and supply Malawi with crude oil to alleviate the economic challenges that the southern African country was experiencing at that time.

Under the government-to-government deal, Nigeria agreed to supply Malawi with crude oil through the NNPC and allowed Malawi to either process or sell the crude, thus-as a buyer-after paying upfront $2.5 million (then over K1 billion) before making first uplift of the oil.

Kapito: Pens Malawi leader

Kapito: Pens Malawi leader

The contract gives Malawi approval to buy and sell 30 000 barrels per day of crude oil made up of several grades as specified in the lifting schedule for each month. This means that, effectively, the country was at liberty to buy and sell over half a million barrels a month.

But since the deal was signed, government has been elusive as to how much was generated, forcing the consumer body to write President Banda who pushed for the contract, first initiated by her predecessor late Bingu wa Mutharika in his attempts to solve chronic fuel shortages.

In the letter dated January 7th, 2014 signed by Cama’s Executive Director, John Kapito addressed to Banda, the organisation lamented government’s failure to disclose how much was spawned from the deal. Cama faults Banda for being secretive on the crude oil proceeds despite claiming to be a champion against corruption, arguing Malawians are entitled to know how much was realized.

“We are therefore requesting the President through the Office of the President and Cabinet to inform Malawians on the proceeds from that donation and how those resources were used to address the economic challenges faced by Malawians knowing fully that the President was also a signatory to the memorandum of understanding and a self-proclaimed champion against corruption in Malawi,” reads part of the letter.

Cama notes that consumers experienced high Petroleum prices during same period the crude oil deal was operational and that Ministries of Finance and Energy have failed to respond to several inquiries made in the past months.

“We strongly believe that Malawians are entitled to know on how Government uses any donation received on their behalf and how such donations contribute to their livelihoods, the donation was for Malawians and it is important for the incumbent Government to explain and inform the public on how such a donation has been used”.

But in an interview, Minister of Information who is also government spokesperson, Brown Mpinganjira said was in the dark as to how much Malawi generated from the crude oil deal.

“Frankly speaking I don’t know how much was made. I need to find out,” promised Mpinganjira but could not answer his phone later when Nyasa Times made a follow up.

Media reports last year revealed that Banda’s administration had dragged the country into a crude oil contract that could be costly for the already troubled economy due to lack of a clear cost-benefit analysis for Malawi in the deal and the legal pitfalls.

It is reported President Banda tasked Nigerian business mogul, Michael Anyiam-Osigwe, as Honorary Consul-General, to ensure that Malawi got the allocation to purchase and sell crude oil from Africa’s largest oil producer whose proceeds, according to National Oil Company Malawi (Nocma) general manager Robert Mdeza, would be used to import processed fuel suitable for Malawi.

And when asked by the media in April last on how much the country has realised from the sale of the oil, Mdeza only said: “All that has been remitted and is in our custody and no single cent has been used.”

He refused to say how much has been made, but said the money is in Nocma offshore accounts.

But it was noted that the money that was made from the deal was not yet been made official, and not even Treasury Department had the slightest idea where it was.

In November 2012, Petroleos De Geneve SA Limited (PDG) managing director Raymond Anyiam-Osigwe told Malawi’s Daily Times that Lilongwe was getting US0.4 cents in royalties per barrel, which he said totalled $760 000 (over K300 million) by then.

He said Malawi had uplifted 903 691 barrels in August 2012 and 997 416 in the second phase in October last year, which is nearly two million barrels.

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