Digging Below the Surface: Exploration Licenses, the Anti-Corruption Bureau and Lake Malawi

A couple of days ago, Malawi’s national daily The Nation ran the story “The politics of oil exploration on Lake Malawi” by Wisdom Chimgwede. Several claims are made in this article about the process of awarding exploration licenses to firms and the involvement of the Anti-Corruption Bureau in investigating an allegation against a Chinese company already operating in Malawi (although in the hotel industry).

Currently, two companies, Surestream Petroleum and SacOil, have acquired licenses to explore different blocks in Lake Malawi. Meanwhile, as readers will be aware, the governments of Malawi and Tanzania are in dialogue, mediated by the Africa Forum of former African Heads of State and Government, about ownership of the lake.

First of all, in a piece that is critical of the former Malawian president, Bingu wa Mutharika, Chimgwede questions the process where only Surestream Petroleum was awarded a license for prospecting.

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.

Secondly, Chimgwede alleges that the Ministry of Natural Resources, Energy and the Environment meddled in the process of awarding exploration licenses:

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.

Thirdly, Chimgwede reports that the Anti-Corruption Bureau (ACB) received a complaint that Ben Botolo, the Secretary for Natural Resources, Energy and the Environment, had received USD 200 000 (approx. MWK 56 million) from Sogecoa to influence the award of a prospecting license. Sogecoa was also said to be using Chinese National Oil Exploration Company as a front in their bidding for prospecting rights.

The ACB followed up this complaint with a letter to Botolo (ACB/LL/474/2011, dated 16 March 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.

Both Botolo and Emily Chen, Sogecoa Projects Coordinator, denied the allegations, although Chen confirmed partnership with the Chinese National Oil Exploration Company and meeting officials at the Ministry of Natural Resources, Energy and the Environment and the Geological Survey Department in Zomba to push for the licence. The ACB appears thereafter to have dropped the case.

Lastly and significantly, Chimgwede points out that Malawi’s current, and outdated, Petroleum (Exploration and Production) Act (1983)

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.

Without significant changes to this law, the process of awarding prospecting licenses in Malawi’s lake and on land will be questionable. Nevertheless, exploration will not begin until the dispute between Tanzania and Malawi over ownership of the lake is resolved.