The late President Bingu wa Mutharika’s sneaking out to Nigeria in February this year resulted in a crude oil deal which has been formalised by the current administration.
Press Secretary to President Joyce Banda, Steve Nhlane, confirmed the existence of the one-year arrangement, in his response to The Daily Times inquiries on the matter.
The deal runs from May 2012 to April 2013.
In February, at height of fuel shortages in Malawi, the late Mutharika secretly went to Nigeria and met President Goodluck Jonathan, and initiated a government-to-government fuel deal.
President Banda reinforced the deal when she travelled to Nigeria after ascending to the presidency.
Under this arrangement, Nigeria agreed to supply Malawi with unrefined petroleum (crude) through the Nigerian National Petroleum Commission (NNPC).
“Her Excellency Mrs. Joyce Banda … is aware of the government-to-government contract with Nigeria where Malawi is to be supported with crude oil from the Federal Government of Nigeria.
“Under the arrangement, Malawi can either process or sell the crude and use the proceeds to buy fuel,” Nhlane said, adding the contract gives Malawi the right to buy crude from the NNPC.
He said technical advice from the agent appointed by the Malawi government to handle the contract in Nigeria was that the government should offer the right to buy the crude to an oil trading company in return for payment of royalties.
This, he said, was after evaluating the options and having taken into account the issue of availability of forex in Malawi to pay for the crude oil.
The Malawi government mandated National Oil Company of Malawi (Nocma) to handle the matter on its behalf including accounting for the proceeds receivable under the arrangement.
“Although the contract runs from May, 2012, Malawi did not immediately start lifting the crude due to lack of facilities and experience for processing the same.
“Additionally, due to lack of forex, government has only lifted the crude twice in August and October this year. The crude was sold,” he said, without giving the amount of money realised from the sale.
He, however, said Nocma, using its given mandate to manage the crude from Nigeria, opened a special account where proceeds from the sale of the crude are credited.
He said President Banda has since granted Malawi Honorary Consul-General to Nigeria powers of attorney to follow up and discuss the contract.
Nhlane said Banda strongly believes that this programme will solve the fuel problem in the country “once and for all” and Nocma has been mandated to work on the options.
“During the state visit of President Goodluck Jonathan to Malawi, the Honorary Consul-General ensured that officials of the NNPC who were part of the presidential delegation met with the officials of Nocma in Lilongwe,” said Nhlane.