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Whither Malawi oil dream

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Malawians were, and continue to be swayed by the prospects of having oil within the belly underneath the fresh waters of Lake Malawi.

The narrative has always been that becoming a producer of oil would result in more cash inflows that could be utilised for national development.

The gross domestic product (GDP) of the country could thus in the end migrate more Malawians from the bottom levels of poverty into the middle class.

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Eventually, oil could also see Malawi graduating from the pathetic list of least developed countries on earth into its middle-income dream economy.

In 2013 Government of Malawi granted exploration licenses to six blocks with potential oil prospects following the geological study that was conducted earlier. Some months down the line, in 2014, contracts were signed for Blocks 4, 5 and 6.

One would have thought that such urgency was the manifestation of a new culture of speed in a drive to translate the oil-producing dream into a reality. Alas, everything stagnated with the signing of the contracts to the belief that all prospects seem to have dimmed.

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But why the snail’s pace in a country where we need the cheetah pace in pursuit of economic progress? It is appropriate to appreciate that the foundations for carrying out the dream missed some building blocks.

The leadership that came in after the general elections in 2014 observed that there was a serious violation of the laws and regulations in the contracts of the blocks. The perspective was that the contracts should have been signed after the completion of the exploration phase to determine the volumes available.

Secondly, there were undeclared names of ownership amongst other companies which was a violation of petroleum regulations – Exploration and Production Act and The Liquefied Fuels and Gas Act Malawi.

Even Malawi’s laws probably did not envisage the discovery of oil in the country. Certainly, oil contracts cannot be framed in isolation from the country’s main constitution, they are just a component specifically framed to determine the government’s position and share in the potential oil and gas proceeds.

Other countries have constitutions that provide the foundation of the oil and gas frameworks, unfortunately, Malawi’s constitution has no mention of the ownership of sub-surface rights.

Calling a spade a spade, the government of Malawi went into offering exploration contracts before the formulation of a clear framework to run the same.

Most countries, Malawi inclusive, have no technical expertise on how to run and develop the oil sector thus ending up risking their financial resources in oil explorations.

The contracts were signed in a clandestine model. Contents of the contracts were restricted to a few people who were close enough to the political powers that were running government before the general elections in 2014.

It is also argued that technical officials who were responsible for modelling the production sharing agreements did not even know or take part in the negotiations and signing of the contracts. This made it difficult for the government technical officials to carry out their duties accordingly in the execution of the contracts.

It is imperative to appreciate that disclosure of contracts is a sign of transparency. In as much as contacts signed had clauses supporting the disclosure of contract details to the public; all that was just good on paper.

On the practical dimension, there was a shroud of secrecy.

The bottom line is that Malawi is too far from becoming an established oil and gas country despite the high prospects of the presence of the resources across the country. There is a need to do a workable policy and law that should regulate the oil and gas industry in line with the international oil companies.

The government politicised the extraction of oil and gas hence its processes are shrouded in secrecy, this should stop and government should realise that Malawi being a least developed country can benefit more and change its fortunes economically if they take the right path in the exploration of its most wanted mineral which will boost its GDP and solve most of its economic problems making its citizens afford basic needs in life with fewer difficulties.

As a nation, we have inadequate management tools, guidelines, and resources to support legal, regulatory, and institutional frameworks.

Inadequate capacity to address local content, exploration and production technology, research and development. Insufficient level of public awareness, participation and sensitisation about the development of the oil and gas industry in Malawi.

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