Editorial: Detach politics, greed from oil exploration licence issues – Mining & Trade Review (April 2016)

The piece “Editorial: Detach politics, greed from oil exploration licence issues” featured below was initially published in Malawi’s Mining & Trade Review Issue Number 36 that is circulating this April 2016.

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

2016-04 Mining & Trade Review Marcel Chimwala Editorial Oil Malawi


Detach politics, greed from oil exploration licence issues

It is a welcome development that after over a year of waiting, the Malawi Government has lifted the ban on oil exploration.

Minister of Foreign Affairs and International Cooperation, George Chaponda, announced the good news at a press conference in Lilongwe a month ago.

We say this is good news because we feel Malawi must not lag behind in exploring for oil as many countries in the sub-Saharan region are busy scouting for oil resources, whose exploitation has proven to be a yard-stick towards economic prosperity.

Geologically Malawi is believed to be at an advantage as it has a vast area located in the Great African Rift Valley where oil resources continue to be discovered.

It is in this vein that Malawi divided its portion of the Rift Valley area into six blocks for the purpose of oil prospecting and the blocks were awarded to different expatriate firms to undertake oil exploration.

The companies that acquired the blocks include South Africa’s Sacoil Holdings which holds block 1, UK’s Surestream Petroleum which later sold the tenements to Hamra Oil-block 2 and 3, UAE’s Rakgas MB45-block 4 and 5 and Pacific Oil-block 6.

However, it was surprising that after taking over government following the 2014 elections, the Democratic Progessive Party (DPP) government slapped a suspension on oil exploration saying they were reviewing the licences because they suspected that the previous People’s Party government awarded them dubiously.

Now that the suspension has been lifted the questions we have are; why has it taken over a year for the government to review the licences and eventually make a decision to lift the suspension? What are the results of the review process thus were the licences awarded dubiously as the Peter Mutharika administration suspected? Why has the government not made public the results of the review process? If there was any foul play in the award of the licences, who are the culprits and can the law enforcing agents such as the Anti-Corruption Buareau pounce on them?

With these questions unanswered, we are forced to believe that this whole oil licence suspension issue is part of some political machinations by the DPP government just to save some selfish interests of some members of the ruling clique who want to maneuver their way to enormously benefit from the oil ventures.

As reported in our main article, the question Malawians have is why it took the Minister of Foreign Affairs to announce the lifting of the suspension when there is the line Ministry of Natural Resources, Energy and Mining.

Another issue worthy noting is that all the six oil exploration blocks in Malawi were already taken up by exploration firms which were deemed competent in the award process and, therefore, we find it absurd to see top ruling party politicians crisscrossing the globe to look for oil investors.

Of course Chaponda is saying that in its investment promotion drive, the Mutharika administration is looking for investors to come in as technical partners for the tenement holders but the questions are; when the government was considering the current tenement holders for the licences, did it not take into account their technical capabilities? Are the tenement holders so incompetent that they can fail to identify technical partners and will need the government to execute the process on their behalf?

Surely all these questions will not come into being if we remove greed and politics from the oil exploration licences issue and let sanity, transparency and accountability prevail.



One response to “Editorial: Detach politics, greed from oil exploration licence issues – Mining & Trade Review (April 2016)

  1. Pingback: Link Roundup for Extractive Industries in Malawi: April 2016 | Mining in Malawi·

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