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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Ndadabwa
Guest

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

Chambo Cha Moyo
Guest

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.

Denga latha
Guest

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.

Desmond Chibala
Guest

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

Chipole
Guest

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.

Mish
Guest

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

professor Batani
Guest

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.

Matola
Guest

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.

Nsapule Khongoni
Guest

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.

Nabetha
Guest

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.

Patrick
Guest

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.

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