Paladin spends K5bn on Karonga community projects

Paladin Energy Limited, the parent company of Kayelekera Uranium Mine in Karonga District has so far coughed up to US$ 15,824,793 (MK4.8 billion) on social development projects for Karonga district significantly exceeding its obligation to spend $US 10 million (MK3 billion) as per the development agreement signed with the Malawi government.

This is despite the fact that the company recorded a net loss of US$137.7 million for the nine months ending March 31st 2012 and that Uranium Oxide prices have been below production levels since the Fukushuma Nuclear disaster in Japan in March 2011.

Company officials told Nyasa Times that the spot price of Uranium Oxide dropped from US$75/lb to US$47.50/lb in the aftermath of Fukushuma. The current price is US$49.50/lb.

Paladin has so far paid the Malawi government a total of MWK 469.4 million in royalties and MWK 3.6 billion in taxes.

Greg Walker:

Renegotiate Paladin deal

The company’s disclosure came amid calls by Karonga residents and some opposition political parties in Malawi who are asking the PP led government to renegotiate the Kayelekera Development agreement by raising its non cash equity to 40 percent from the current 15.

The Kayelekera Development Agreement was signed by the Government of Malawi, Paladin (Africa) Limited and Paladin Energy on 22 February 2007.

The calls especially by the Karonga Business Community, which claims to have the blessings of political, religious and traditional leaders in Karonga, accuse Paladin of backtracking on its corporate social responsibility or doing less than agreed.

But the company said the deal was non-negotiable as the agreement provides for 10 year breather to project lenders and company shareholders.

Apart from that the Malawi government will have to formally buy its 15 percent stake at US$21.75 million or pay US$58 million if the stakes are raised to 40 percent.

Paladin Energy Limited General Manager-International Affair Greg Walker warned that any attempts to forcefully raise the equity to 40 percent will be akin to nationalisation and will scare potential investors.

Last week the Karonga Business Community, which also claims to be an umbrella body of all Business Associations in Karonga, met Malawi’s vice president  Khumbo Kachali and some cabinet ministers on a host of issues including the lack of business opportunities from Paladin.

Clinic project stalled

According to Paladin the only project that has stalled is the construction of a Clinic at Kayelekera due to the insistence by the Ministry of Health that Paladin should provide MK250 million funding to the Ministry of Health.

“Paladin does not accept that this is ‘to a typical standard’ for a clinic in a village with a population of 2,000 people. Land has been set aside and the Company continues to negotiate with the Ministry. Kayelekera Village elders have been kept fully informed of developments,” Walker said in an email response to Nyasa Times.

In a statement released on Monday and signed by Chairperson Wavisanga Silungwe, the Community claimed several items under the Social Development Fund are still pending.

“Paladin promised free water for the people of Karonga. The Water Garnet Project is under NRWB and we are paying. Before Paladin came reconnection was K300 but upon completion of the project it jumped to K2000 and water pressure is worse than before. Is this free?,” Silungwe queried.

Silungwe also said Paladin promised to rehabilitate and extended Karonga District Hospital to referral standards “but they only built a kitchen”

But  Walker does not agree that the company has not met its obligations saying those making those charges are either ignorant or are making those out of malice.

“Following completion of the Water Supply Project, Karonga District Hospital was identified as the local public service institution most in need of support under Paladin’s Social Development Programme. Renovations have included replacement of ceilings, windows, screens and plumbing fixtures and restoration of the Hospital’s kitchen which was destroyed by fire.

“Paladin has also upgraded the guardians’ shelter by repairing and painting a dilapidated four-room. Paladin also constructed a large, sheltered cooking area, toilets and bathing stalls,” Walker said

Paladin’s obligations

Under section 20.1 of the Development Agreement the Company sent for training two qualified Malawian Doctors to be trained in the effects of radiation on the condition that they will return to Malawi and services communities at Karonga and Kayelekera.

“While it was the intent of the Development Agreement that the two doctors should be posted to Karonga following their training, neither doctor has been posted to the northern region, however Paladin has no power over such matters, which are at the discretion of the Malawi government,” Walker said.

Construct at Kayelekera a primary school, housing for four (4) teachers, an office for teachers working at the primary and secondary schools and a clinic to a typical standard for such a facilities in Malawi using local labour to the extent practical.

Under 20.2 the Company agreed to spend US$10 million MK3 billion) on the construction of education facilities which are likely to include a boarding secondary school with teachers housing and to use the balance of the money in provision of medical facilities.

Under Clause 20.3 Paladin was not required to commence construction under the Social Responsibility Plan until the third anniversary of the Production Commencement Date (which would be October 2012).

Court action

“But on 16 May 2007, six non-government organizations, known collectively as the Civil Society Group (CSG) commenced legal action in the High Court of Malawi against Paladin and the Malawi government demanding that the amendment of the Social Responsibility Programme,” Walker explained.

The CSG members were: Centre for Human Rights and Rehabilitation (CHRR), Citizens for Justice (CFJ), Foundation for Community Support Services (FOCUS) Uraha Foundation (UFM) Catholic Commission for Justice and Peace (CCJP) and Institute for Policy Interaction (IPI)

He said all parties then agreed that $US 8.2 million of the US$ 10 million which was to be spent on a school and boarding facilities be applied to the upgrading of the community water supply at Karonga.

“In reaching the settlement, the Parties engaged in constructive dialogue which was facilitated by the Paramount Chief. Karonga MPs assisted in ensuring that the settlement addressed the matters of concern to the people of Karonga. On 27 November 2007, the CSG withdrew their High Court action,” said Walker.

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