Opening the Cocoon: Clearing the mists behind oil licenses in Malawi- Part 1

The global Mining sector has for long time been considered an engine for the socio_economic development of many States. Even though Minerals as well as Oil and Gas are finite resources, their sustainable exploitation reallocates the country’s economic status from being impoverished, to developing and then developed State. The nation’s extractive industry can improve the country’s investment base which has a high multiplier effect depending on the ‘Linkages’ aspect to other sectors.

President Peter Mutharika said  Malawi will go ahead with the plan to drill poil and gas in the Lake Malawi, saying there is nothing to worry on aquaculture as well as human life.
Following the global extractive industry development,  Malawi,  having the need to attain the socia_economic development, decided to follow the footsteps of other States which have benefited alot from their Mineral and Petroleum endowments.
The Malawian Solid Minerals sector received a boom in 2009 when Kayelekera Uranium Project was opened. There after, in 2011, it was the Oil and Gas Sector which saw government granting it’s initial licences to investors. For both these sectors, the Mines and Minerals Act (1981) and the Petroleum Act (1983) with its 2009 Regulations were the key legal documents used to identify the investors and also provided as a tool to prudently govern the sectors.
This series of publications will be zooming into all issues surrounding the Oil and Gas Sector, mainly the Licencing issues, PSA issues and also the governing approaches. A deliberate approach of analysing issues per each licencee will be done for easy following on the developments within the sector.
1. RAKGAS MB45 Company Limited Malawi.
The work undertaken by our investigative journalists have indicated that RAKGAS MB45 Company Limited was granted Licences for Blocks 4 and 5 in 2013. This was done after government had run adverts for investors in local media channels as well as international media.
Even though Malawi is a frontier country especially with regards to the Oil and Gas needs, the advertisment process managed to attract 11 bidders who included…
Identifying the Winning Bid:
Government of Malawi believed that the resource belongs to the Malawian population. As such, the evaluation criteria was crafted with an intention to secure that great ownership and benefits to Malawians whilst also ensuring that a rough win-win situation is achieved.
The Evaluation Criteria was based on the 2009 Regulations and according to the copy of the criteria which we are in possession, it includes, among others, the following:
a) Realistic and implementable Program of Works; this was supposed to include a minimum commitment of resources to be spent by a company;
b) Benefits to Malawians: Employment opportunities, Training of Malawians,  Local Content issues such as supply of goods and services by Malawians;
c) Proposed fiscal terms: Since Malawi chose to use Production Sharing Agreement (PSA), issues such as Royalty, Profit Oil Sharing, Ringfencing where need be, Taxes, Recoverable Costs and rate of recouping the expenses etc, we’re featured highly;
d) Environmental mitigation measures to ensure sustainable and environment friend methodology during exploration and later, production.
e) Global,  Region company experience and capacity.
These were just some of the issues which stood out clearly in the evaluation process of the 11 bidders.
Evaluation and Successful Bid;
Firstly, the Investigative desk discovered that the Licencing Committee comprised of members from the Parent Ministry responsible for Mining, Department of Mines, Geological Surveys Department,  Environmental Affairs Department,  Ministry of Justice and Constitutional Affairs,  Ministry of Finance, Malawi Revenue Authority,  Ministry of Lands and Ministry of Foreign Affairs.
Every member, with an exception of the Chairperson of the Committee,  Dr. Leonard Kalindekafe P.S.,  was given the mandate and vote independently basing on his or her assessment. The report indicates that the Chairperson was to act as a tiebreaker wherever need be. Maximum points were given per each criteria used.
After the evaluation of Bids for 4 and 5, RAKGAS MB45 Company Limited of Box 434, Ras Al Khaima,  United Arab Emirates,  was weighted highly comparing to the other ten (10) bidders.
The Licencing Committee made a recommendation to the Minister to consider granting the Licences to RAKGAS MB45 Company Limited.
Examining the Unceasing Stories of RAKGAS bribing government to get the Licences:
For a very long time, the Investigative desk has been reading reports suggesting that the State was bulldozed and bribed by RAKGAS to be given the licence. Much has been spoken but with little tangible evidence ro justify the reports. It has even further been alleged that Malawi’s Anti Corruption Bureau is investigating on the matter. The Investigative desk has so far found the following:
1. The Licences were legally and legitimatily granted.  Government followed all the procedures and that no one of the evaluators, who recommended for RAKGAS to be granted the licence, was among the final decision maker.  What the Licencing Committee recommended was exactly what the Minister approved and ended up granted a licence.
2. Anti Corruption Bureau has NEVER quizzed the Ministry on the matter. From sources which pleased for anonymity, it was found irrelevant for ACB to pursue this matter as their preliminary examination on the Matter proved that the Licencee never bribed government or any official to get the licence. It was concluded that the application was legitimately granted the licence.
3. The Investigative Desk also inquired the position of the Ministry of Natural Resources, Energy and Mining which conjured with ACB’s position. The Ministry clarified the matter and emphasised on the fact that RAKGAS MB45 Company Limited got their licences as required by Law and called for all those publishing false information to stop or bring evidence of their accusations to the Ministry.
The Ministry indicated that humiliating innocent investors in our sectors becomes a stumbling block for Malawi to achieve its Socia_ Economic Development.
(—# Part 2 we will continue on suspension of oil and gas license and subsequent reinstatement – what transpired .?  Case of Blocks 4 and 5)

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32 replies on “Opening the Cocoon: Clearing the mists behind oil licenses in Malawi- Part 1”

  1. musapuse a Malawi, ndalama zonse za oil adzadya ndi Peter Muntharika, Ben Phiri, Getrude Muntharika ndi Chaponda Chimanga

  2. Ine monga woyanganira chambo zonse ndi abale awo mu dziko lino ndapeleka chiloledzo kwa a Rak Gas ndi a boma kuti akhoza kufufuza mafuta pa nyanja yathuyi.
    Bola abweletse ng’ombe khumi ku nyumba yanga.

  3. Nkhani ili apa ndi yabwino zedi. Chuma cha dziko lino chikutsika. sitingadalire ulimi okha ai abale. Tatiyensi tiyese nawo nkhani za oil. Boma likutitsimikizira kuti iwo ayesetsa kuti nyanya yathunitetezedwe komaso anthu tonse tipindule.

    Tikapusatu Tanzania itilanda ife tili dyooooo. Mwatani kodi amalawi.

  4. Good people let us remove the negative perception towards the extractive industry. We need to be open minded and we should learn from what others are doing.

    we can lean from countries like Norway on oil and gas reserves under the continental shelf are being transformed into financial reserves for future generations. Norway’s wealth is no suprise, it is the world’s 5th largest oil exporter . Can that be our dream too? Malawians pls pls pls

  5. Malawians deserve the best! Why shouldn’t we go for oil projects in the country? A Malawi anthu ena ake asatinamize ife nkumavutikabe. Let us support such projects. I see that there are environmental issues considered there which gives us hope that the projects will be managed well. I totally support this.

  6. ACB won’t find any thing, they never do kkk.
    And if this was dirty money we would have known by now

  7. it is important to take note of government initiative in pushing for transparency and steps taken in signing the Extractive Industry Transparency Initiative is very encouraging and commendable. and government’s assurance on safety issues of the lake and the communities is also a very wonderful development. and government must continue to assure malawians not to worry in regard to environmental issues in the lake as currently buffer zones have been created sorrounding the national park.

  8. Mwatimasula apa. Takumvani a Boma . Koma sitikufuna mbola kuchokera ku ma company amenewa. Akuyenera azalembe ntchito a Malawi. Osati mpaka ma casual labour kuchita kuchoka kunja.

  9. Malawi is blessed with a vast resources, and these resources constitute a principle source of public revenue and national wealth. why should the country remain the poorest when we have resources to be used. Obviously it is the wish of every Malawian to have a better life. We cannot talk about sustainable economic development if we do not want to diversify our economy. Look at how agriculture is performing now. what crops do we export and how much do we get from them?

    let us learn from other countries, even our neighbouring country zambia.

    1. You are talking great. But considering the corruption levels in the country right now this will become another tea party for political thugs and Mafia. check out what is happening in most Afriacn countries who own oil reserves. This will bring more late Chasowas and Njaujus. First things first let’s address our values, moral decadence, corruption otherwise instead of good it will bring pain.

  10. For how long shall we rely on agriculture as an economic booster? Come on! We need other alternatives and oil extraction can be a better option. Government, just make sure that there are good measures that will enable us all benefit.

  11. Koma ife nde tikudikira kuti timve zambiri zoona kuchokera ku Boma. Nkhani ngati iyi zikuyenera kumalembedwa kuti tidziwe choona chenicheni cha ntchito za mafuta kuno ku Malawi. Tatopa ndi kumva zammaluwa.

  12. We should not only be blinded by the NGOs which are getting funding to criticize but also we should consider the benefits from these major projects. Imagine the economic boom that Malawi can experience! Malawi let us positively support this.

  13. The mineral and petroleum sectors is what we can hope for as Malawians for a better economy. There are so many benefits that as a country we will benefit from the oil. Most people need mindset change.

    The education curiculum also has to be updated, so our children should begin learning these things way back before university. Its not only about agriculture now, we need to put much focus on other potential sectors, in this case the mineral and petroleum sectors.

  14. Thats the way to go, thank you government….In case we change the government, sikuti ma plan awa adzasinthe ayi.

  15. It is a good development that government is able to disclose such information to the general public, this is transparency.
    It is true that there are few individuals who may be greedy, but do we need to give up? No. we need to move forward and join hands. We need to move forward as a country.

  16. RAK has spent a lot of their funds so far , if we change our mine of not going ahead with the extraction if their is oil or gas , brace for legal battles where we can lose billions as they have a legitimate license..

  17. I for one as a bonafide Malawian has no problem with the continuation of search for oil and gas in Malawi if the licences were legitimately granted. We need such Companies that are ready to use their resources to let us know whether we are blessed with Oil and Gas as a poor landlocked Country. If Noone in Malawi is ready to spend such huge amount of money or investments for the unkown existence of Oil and gas, why should we fear for the unkown….Let the work continue and we can learn from similar discoveries along the Great African Rift Valley in Lake Victoria than fearing for the unknown…..It will be up to us to manage it sustainably….Go RakGas and show us what we have there first….
    All we need to see is sustainable utilisation of such resources and comprehensive corporate social responsibility that will enable Malawians benefit positively either directly or indirectly from the exploitation of the resources..

    Following.

  18. It’s now one and half years for the Govt to approve the negotiated production sharing agreement, it’s the best PSA in Africa and Malawi ll benefit a lot. It ll be very sad if we don’t decide now and if their is change of Govt the new people make the decision to go ahead with the extraction of Oil. Prof APM has mentioned several times in public Malawi is going ahead with this project, the officials are delaying.

  19. Thank you Nyasa for the timely update. I also personally thank the Malawi government throug its ministry for putting interest on the extractive industry as well as oil and gas sector. For so many years out economy has been agro based,and the country is still ranked one of the poorest countries. Its high time we diversify our economy following these climate change issues, soil degradation, increased anti smoking campaigns for our main cash crop tobacco just to mention few examples. The mineral and petroleum sectors have a high potential for economic diversification and one of the ways to contribute to economic growth of the country.

    Regarding the oil exploration activities, I don’t thinks Malawians should worry much with negative impacts because there are always EIA/ESIA studies for such big projects before everything. It is a requirement according to environmet management act of Malawi. As patriotic citizens let us try to support the government because it is for the benefit of Malawians.

  20. APM has no choice as the Licenses are already given and international business community ll lose trust if Govt decides other wise. God has blessed Malawi with the resources but we are failing to utilize.

  21. Malawi as a country has never benefitted from these so called mineral, few individual will enrich themselves, why should we spoil our fresh water. Mr. President I you really love this country and its people don’t allow this to happen in our beautiful country.

  22. He must pay and be held accountable. Sacrifice our beautiful lake for oil, that won’t Even make Malawi e global oil player like Nigeria or Angola our government is the MOST STUPID AND SHORT SITED GOVERNMENT WITH FUCKING SHORT TERM SOLUTION FOR LONG TERM PROBLEM. We should OVERTHROW ANY GOVERNMENT THAT TRIED TO DRILL FOR OIL IN OUR PRECIOUS LAKE

  23. It is good that government is coming up with such information to the public. The general public must have a full understanding of the matter at hand. I am sure no one can be willing to pollute our beautiful lake, yes even our leaders cannot do that. I am sure there are good environmental management measures as stated above. This gives me hope that venturing into the project is not a loss at all. Of late, Malawians are crying for unemployment rate. I think such business endeavors are one of approaches to creating the much wanted jobs. Living in fear of unfaced consequences is what is still making Malawi as poor as what we are todady. Remember the projects have environmental impact mitigating measures. If the companies don’t comply to that, I am sure all the NGOs in Malawi can raise an alarm for the betterment of Malawians as they always do.

  24. The best Government should do is not to proceed with such contracts. For the signed ones, the Government should be pressured to cancel all and renegotiate them without fail. This is where CSOs need to play a big role in mobilizing the masses and educating the corruption taking place.

  25. It is good that government is coming up with such information to the public. The general public must have a full understanding of the matter at hand. I am sure no one can be willing to pollute our beautiful lake, yes even our leaders cannot do that. I am sure there are good environmental management measures as stated above. This gives me hope that venturing into the project is not a loss at all. Of late, Malawians are crying for unemployment rate. I think such business endeavors are one of approaches to creating the much wanted jobs. Living in fear of unfaced consequences is what is still making Malawi as poor as what we are todady. Remember the projects have environmental impact mitigating measures. If the companies don’t comply to that, I am sure all the NGOs in Malawi can raise an alarm for the betterment of Malawians as they always do.

  26. Kodi anthu afuna angosokoneza chitukuko chathu bwa? Zimenezo nde zachambatu.

    Ife tufuna tizigula litre yimodzi pa K200 nkumastanta mu hood adha.

  27. This is all purely based on speculation from the so called “investigative desk.” For the development of our Nation, it is only right we use such resources to the benefit of the Malawian people.
    The committee set up a criteria which was followed wholly and the license was granted to RAK GAS MB45 accordingly by the Minister with recommendations from the special evaluation committee.

    For all we know these “investigators” could have been paid off by a group of people to spread false information which would lead to these resources not being exploited leaving our Malawian people in the poor economic environment that we are stuck in now.

  28. JVInLA,

    You will protest on what mbwiyeee? Wa Neba pa Zembo, Mozambique, TZ Are exploring for Petroleum on Land even on water, and why should Malawi lag behind? Tavuta na ukavu please. Government, go ahead. Kweni Chambo chila tikuchitemwa chomene. Take care.

  29. Ife tikufuna chuma. Kodi umphawi tidzakhala nawobe mpaka liti? Chonde Amalawi, tatopa. Zofunika to RAKGAS:

    1. Don’t spoil our Lake
    2. Employ Malawians and don’t just bring anybody as an expatriate
    3. Adhere to the Laws of the country
    4. No unnecessary externalisation of forex.
    5. Consider having a refinery in Malawi. No export of crude Oil.

    As for Government :

    1. Our eyes are open. EITI should be used and no theft
    2. We don’t want the DUTCH DISEASE… Let the resources be mined or produces sustainably
    3. We want the Policy and review the Act now!!! We also want the Strategy Paper for Oil and Gas
    4. Let every Malawians be a beneficiary of these resources.

    Nkadza apo ndaima otherwise, good work by the Investigative desk for informing us fairly. All the best RAKGAS

  30. I tried to follow up on this issue with ACB, I realised that it was a waste of time. To be honest, RakGas is innocent. After suspension, it was also proved that they were doing things rightly and according to the law. Mwina choti tipange is to amend our laws urgently. Let’s support the company. Oil is big money which can help our country’s economy grow

  31. This now makes sense. If Malawi is to get out of the poverty it is embroidered in, utilising its Mineral and Petroleum endowment is the bets way to go. If we look at countries such as Norway, Finland, Brazil, Peru, Australia and the upcoming Oil and Gas giant in Africa, Uganda, they are where they are because of Petroleum resources.

    We have to stop thinking in a primitive way. There is no other way Malawi can get out of its poverty if not through the mining sector. As for Agriculture, fertility of our land is fast being lost, tourism is another hopeless sector, what else? Dying of poverty forever?

    We can produce Oil without war. Are people fighting in Norway and many other countries? What matters is transparency and the good news is that we already have EITI in Malawi.

    Oxfam and many other ill minded commentators or writer, please be factual like this article has addressed issues. We know that you serve your masters but please don’t make your greedy work at the expense of poor Malawians.

    I am convinced that RAKGAS followed all the needful processes to acquire the licence. What is critical is for Malawians to support them so that a win win situation is arrived at by the investors and the Nation…

    Malawi is on the move!!!

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