The piece “Malawi EITI Study recommends transparency in Nacala Railway concession proceeds” featured below was initially published in Malawi’s Mining & Trade Review Issue Number 38 that is circulating this June 2016.

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

Malawi EITI Study recommends transparency in Nacala Railway concession proceeds

By Marcel Chimwala

A scoping study that was conducted in readiness for production of Malawi’s first Extractive Industry Transparency Initiative (EITI) report has pointed out the need for more transparency in the handling of the concession fees for the newly constructed Nacala Railway stretch, which is expected to become one of the largest sources of revenue in the extractive sector.

The rail stretch was constructed by Brazil’s mining giant, Vale, to haul coal from Moatize mine in Mozambique cutting through Malawi to Mozambique’s Indian Ocean Port of Nacala.

The Malawi Government already signed an agreement with Vale for the Moatize Coal Railway link which provides for annual fees of 4% gross turnover of the concessionaire on product (coal) transportation over the concessionaire’s rail section, and the payments are meant to be collected by the Public Private Partnership Commission (PPPC).

The proceeds will not go to Government’s Account Number 1 as they are earmarked for government’s contribution towards railway services, maintenance and improvement of the old railway network for transportation of general goods.

However, at the end of the study, PPPC could not provide a record of the contractual agreement between Government and the concessionaire (infrastructure manager) for the rail link for the transportation of coal. This implies that PPPC is not in the position to collect the anticipated revenues unless they have the copy of the agreement and put in place mechanisms for such payments,

reads the study report.

No payments to date on the concession have started running but the report says even if they were running they would be no payments collected until government provided PPPC with the agreement with the concessionaire and PPPC is given specific instructions to begin collections.

Once revenues accrue from the Nacala Railway, it will require the PPPC to disclose the revenues received.

Malawi is currently a candidate country for the EITI and the government needs to abide by the transparency requirements of the global initiative in order for the country to attain complaint status.