The politics of oil exploration on Lake Malawi

Prospects of Malawi exploring oil on Lake Malawi have had ups and downs in 2012.

In fact, downs outweighed positives, leaving pessimists believing that this would be another of the many mining projects now enriching foreign capitals while Lilongwe snores, dreaming in hope.

Environmentalists’ continued “no” voice against the exploration, let alone drilling on Lake Malawi, seemed to have splashed bad omens on oil prospects.

Meanwhile, some politicians and government officials close to the processes seemed more interested in prospects of fattening their pockets than serving the interests of the 13 million Malawians.

Suspected corruption in the way licenses for oil exploration were being awarded, made headlines.

The Anti-Corruption Bureau (ACB) took preliminary steps to investigate senior civil servants on one hand, while on the other, politicians continued with their usual finger pointing as wrongs came to bare.

Thanks to misfortune—the death of president Bingu wa Mutharika—a lot of the otherwise evil secrets in the oil hunt were laid bare and Malawians finally came to know that in fact, the economic engineer (Mutharika) had slowly turned into an economic vulture.

At the height of hunting for prospective oil explorers, the late president saw no justification in leaving negotiations to technocrats; rather, he added that to the Presidency’s Terms of Reference.

From a list of six companies initially affirmed to have won the bid to be given blocks to start oil exploration on Lake Malawi, Surestream Petroleum was the only one licensed, raising eyebrows in the process.

But according to Surestream chief executive Officer Christopher Pitman, the company scored the highest points for blocks 2 and 3 which they bid for; hence they were given the license.

“We only bid for Blocks 2 and 3 which we were subsequently awarded. The Ministry of Mines, Energy and Environment did not award permits 1, 4, 5 and 6 for reasons we do not know,” said Pitman.

Further investigations into the oil exploration prospects revealed that the process was fraught with irregularities.

Probably the worst of the blunders was how the Ministry of Natural Resources, Energy and the Environment recommended to the late president a Chinese firm, Sogecoa, to be given the exploration licence without adhering to bidding processes at the expense of other companies that qualified after a technical evaluation.

Sogecoa, the company that built the New Parliament Building and Golden Peacock, the five-star hotel near Capital Hill in Lilongwe, never submitted any bid in response to Government of Malawi adverts and was not, therefore, evaluated. Yet, the ministry recommended that it gets a licence.

Both former Principal Secretary for Natural Resources, Energy and the Environment and former minister Goodall Gondwe confirmed that Sogecoa did not apply.

Yet, Gondwe also acknowledged in an interview that Sogecoa was recommended to Mutharika for possible licensing.

ACB got a complaint on the issue alleging Sogecoa had paid $200 000 (K56 million) to Ben Botolo, the Secretary for Natural Resources, Energy and the Environment to influence the award of a licence.

This prompted the bureau to write the secretary for Natural Resources, Energy and the Environment on the matter in a letter reference number ACB/LL/474/2011, dated March 16 2012.

“The bureau has reviewed the complaint and is of the view that your office is best placed to comment on the issue. You are, therefore, being requested to comment on the matter and revert to the bureau at the quickest possible convenience.”

In the letter signed by assistant director Victor Banda, the ACB also alleged that Sogecoa was using Chinese National Oil Exploration Company as a front in their bid to obtain a licence.

Botolo said the allegations were unfounded, while Sogecoa officials said that Chinese National Oil Exploration Company was its partner.

Emily Chen, Sogecoa projects coordinator, confirmed the company did not apply for the licence but denied bribing anyone. She also confirmed partnering the Chinese State firm.

She confirmed meeting officials at the Ministry of Natural Resources, Energy and the Environment and the Geological Survey Department in Zomba to push for the licence, but said there was nothing fishy about the meetings.

In an interview to explain the demarcation of blocks, the Geological Survey Department director Dr. Leonard Kalindekafe said Lake Malawi and other parts earmarked for oil exploration have been divided into six blocks. Kalindekafe is now principal secretary for mines.

But probably the president, or presidents in future, would be excused to find themselves at the centre of these shenanigans. The current law does not seem to help matters either.

The 1983 Petroleum and Exploration and Production Act vests all powers to control petroleum products in Malawi in the hands of the President although the Act also empowers the responsible minister to conclude agreements.

Just this December, one more company, SacOil, has been given a license to explore oil on one of the four blocks that remained after Surestream.

But none of the two has officially started exploration works although Minister of Mining John Bande is sure of the future of oil exploration.

Only time will tell.

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