Mining & Trade News

The Ministry of Natural Resources and Mining says it has finalised working on the draft upstream petroleum policy, and the document will soon be submitted to Cabinet for final deliberation and approval.

Head of Oil and Gas Desk at the Ministry Cassius Chiwambo told Mining & Trade Review that the draft Petroleum Policy has already been approved by the Principal Secretary’s Committee on Natural Resources and Mining.

Chiwambo said: “Government with technical support from the Commonwealth Secretariat conducted a series of consultative meetings in the country that attracted views from the public that were used as key instructions for the development of the draft policy.”

“Meanwhile, the Government finished working on the Draft Policy and we are just waiting for the Ministry’s wish that the Draft Policy be tabled by the Cabinet Committee as soon as the Committee meets.”

To ensure that the Draft Policy meets both domestic and international standards, Chiwambo explained that the Government conducted further review and legal consultations on policy issues that seem to be in conflict with entire Laws of Malawi and international best practice.

Chiwambo said the Policy has been crafted to ensure that there is a win-win situation between Malawi and multinational oil exploration and production firms.

“The Draft Petroleum Policy cites quite a number of national fundamental principles such as Resource Ownership and Development, Local Participation, Local Content (Proposing for a Local Content Policy) issues; including Corporate Social Responsibility, Environmental Standards, Transparency Issues and Measures, Capacity Development and many others,” he said.

Chiwambo said in the drafting process, the Ministry considered the Triple Bottom-line Principle as per the technical and legal advice submitted to Government of Malawi by the International Atomic Energy Agency (IAEA) Special Resource Classification Team in 2015.

He said the technical and legal advices focused on the three axis of Geological, Socio-Economic Development and Feasibility.

“Looking at some of the areas which are considered in the Policy, we can see that both Multinational Cooperatives (MNCs) and Malawians will benefit a lot. It is the desire of Malawi Government to ensure a win-win take as supported by the African Mining Vision (AMV) and the Agenda 2063 of Sustainable Development Goals (SDGs),” he said.

Malawi’s part of the Great African Rift Valley is classified as a potential area for oil exploration following the discovery of oil in countries such as Rwanda, which are part of the geological set up.

The Malawi Government divided the area into six oil prospecting blocks that were awarded to multinational exploration firms. The government awarded Block 1 located in Chitipa and part of Karonga to Efora Energy formerly SacOil, Block 2 and 3 located in Karonga, Nkhata Bay and Nkhotakota to Hamra Oil, Block 4 and 5 located in Dedza, Mangochi, Balaka and Machinga to Rak Gas and Block 6 located in lower shire to Pacific Oil and Gas.

However, Efora Energy and Pacific Oil and Gas later relinquished their licenses. Chiwambo said government will issue the licenses for the two blocks to interested investors in line with the international best practices and desirable standards that were proposed by Malawians during the consultative forums and many other information sourcing streams.

“The Ministry plans to release another advert to identify new investors for these blocks once it is ready,” he said.

The Ministry is also working on reviewing the Petroleum (Exploration and Production) Act of 1983 which is considered outdated as it was drafted before the country planned to go into petroleum exploration and production.

Chiwambo explained that the process of reviewing the Act commenced some years back, and the Ministry is now at an advanced stage in executing the process.

He said: “The Ministry with technical support from Commonwealth Secretariat conducted a diagnostic assessment of the current Act to identify gaps in it, and several issues were identified for reform in light of the Policy (Draft) and international best practices.”

“The new Act will ensure harmonization with the principles enshrined in the Policy (Draft), the African Mining Vision and international best practices for the sustainable management of natural resources. These principles are capable of supporting the government to achieve the Sustainable Development Goals (SDGs) and the Agenda 2063.”

He said in the coming Act, resource ownership will be vested in the state of behalf of the people on Malawi while in the existing Law of 1983, it is vested in the Life President on behalf of the people of Malawi.

“In the new Act, the entire property of petroleum, in, under or upon any land or waters in Malawi will be vested in the Republic; but without prejudice to the exercise of any right under or pursuant to the Act.”

The new Petroleum Act will also address issues to do with transparency and accountability, good governance, balanced fiscal regime, maximization of local content and environmental sustainability among several other issues.

Business consulting firm, Project Innovation Center (PIC), says it is eyeing to raise 1 Million Entrepreneurs by 2025 through a project dubbed “Ending Self Engineered poverty”.

During the 5-year project which started in November last year, PIC is targeting Innovators and Entrepreneurs in Health, Information and Communication Technology, Agribusiness, Energy and Tourism sectors, and among other interventions the center is providing free business coaching.

Speaking in an interview with Mining and Trade Review, PIC CEO Kondwani Kachamba explained that the main objective of the initiative is to woo many young people to embrace entrepreneurship and innovation as tools for transformation and the firm is working in coordination with Malawi’s Credit Data and Africa Development Bank (AfDB) in the initiative.

Kachamba said; “The role of PIC is to identify and train aspiring entrepreneurs and innovators, polishing their ideas into Bankable business plans, and we link them to AfDB for funding (AfDB), and through AfDB entrepreneurs can access loans ranging from K15-Million to K200- million, whilst for those in tourism sector the sum goes up to K250-million.”

“As for Credit Data, its main role is to track applicants and ensuring that the beneficiaries are servicing their loans.”

Kachamba also said that mainly the center is focusing on participants with life changing ideas in the aforementioned sectors including software development in ICT and Value Addition in Agribusiness, which are essential for Malawi’s economic growth.

In the meantime, the firm has 143-thousand entrepreneurs in one network, who have been roped into the project for the past 5-months.

“Being a 5-year project, we shall conduct a postmortem once this tenure elapses, where among others we shall analyse pros and cons of the program, and from there we shall see if there will be a need to continue with the program or to change the criteria,” he said.

However, Kwachamba lamented over government’s restrictions on public gatherings as a containment measure against Covid-19 pandemic saying they have affected their operations which involve live meetings.

“Previously we used to conduct our business trainings in public places such as Amyrlls Hotel in Blantyre but due to the pandemic, we have channeled these trainings to online sessions thus excluding entrepreneurs with no access to Internet.”

Recently, the firm partnered with Women Lawyers Association in an effort to bridge the gap between women entrepreneurs and the legal experts in the country.

Malawi’s largest conglomerate Press Corporation Limited (PCL) says its general business remains at a low ebb in light of continuing uncertainties due to the political crisis following the nullification of the May 2019 presidential elections and the outbreak of the coronavirus pandemic (Covid-19).

In a summary of audited results for the year ended December 31, 2019 signed by the CEO George Partridge, the MSE Listed Group says the political crisis and Covid-19 pandemic created an unhealthy environment for its business in 2019 and are likely to continue stifling business in 2020.

Partridge says: “Covid-19is likely to continue to have an impact on the Group’s general productivity and business as supply chains world-wide are severely disrupted.”

“Management is closely monitoring the pandemic and taking all necessary precautionary and mitigation measures.”

Partridge says nullification of the presidential elections and post elections disputes in 2019madePCL’s operating environment a challenging one whereby the dual factors created business uncertainty for consumers forcing them to be spending less on goods and services.

He says the unprecedented low consumer spending impacted the revenue generation of the conglomerate resulting in the Group registering only 3% growth which has generated pressure on working capital and has culminated in a 131% increase in net finance charges.

The Group delivered a profit after tax of MK24.76 billion (2018 MK36.71 billion) representing a 33% decrease from 2018.

However, some of the conglomerate’s subsidiaries performed brilliantly in 2019 including National Bank of Malawi which registered an after tax profit of MK17.1 billion from MK15.97 of 2018 representing a 7% increase.

In the energy segment (ethanol manufacturing), there are also strong results with a 53% increase in earnings.

Partridge says: “The performance was driven by the continued satisfactory performance by PressCane which registered a 10% growth in its earnings and similarly, Ethanol Company (EthCo) registered a 346% growth in its earnings from the loss made same period last year.”

“The loss by EthCo was driven by increased utilization capacity due to the availability of raw materials from carry-over stocks and improved sales volumes.”

But the Group which owns stakes in landline operator Malawi Telecommunications Limited (MTL) and cellular network operator TNM  has recorded a 33% profit decline from the telecommunications sector and a 10% decline in its net earnings following the a once-off restructuring expenditure of MK104 billion, a stock write-off of MK450 million and increase in depreciation expenses as a result of heavy capital investment made over the past three years to reposition the companies for sustainable growth.

“Plans are underway to identify a strategic partner in MTL,” he says.

In the consumer goods segment in which PCL owns a retail chain People’s Supermarket, the conglomerate has reported losses of up to 44% as a result of 21% decline in sales revenues due to closure of a number of stores following restructuring of the business, attendant restructuring costs, and a 61% increase in interest costs.

“Directors are weighing various equity re-capitalisation options to deal with the company’s unstable debt position. The search for a strategic investor is continuing.”

Partridge pledges to continue with the Group’s efficiency drive and initiatives that will help to turnaround the companies that have under-performed.

He says: “During the year, a diagnostic study revealed that part of the underperformance of these companies is on account of severe under-capitalization which requires urgent attention.”

“Management has already drawn up plans to remedy this. In respect of previously reported loss making companies, it is pleasing to note that Press Properties Ltd and EthCo have completely turned around and are profitable while Food Company Ltd is now significantly moving in the right direction.”

The Malawi Government has called for more investment in Greenbelt irrigation projects as one way of transforming the country’s economy.

Minister of Irrigation and Water Development Charles Mchacha made the call after touring Salima Sugar factory, which is a product of Greenbelt Authority.

Mchacha, who was accompanied by his Deputy Esther Majaza, said with substantial investments, Greenbelt initiatives have the potential of turning around the economic status of the country.

“Learning from the sugar factory, it is clear that as a country if we put more energy and resources in Greenbelt initiatives, the economy will not be same in the next few years to come,” Mchacha said.

The Minister, who toured the factory and the sugarcane plantation, said it is pleasing to note that since the company’s inception it continues to grow in its operations which have provided a ready market for sugarcane to smallholder farmers in Salima and surrounding districts.

” I am also told that the company has now employed close to four thousand people, which is a remarkable achievement in terms of uplifting the wellbeing of Malawians,” Mchacha said.

Acting CEO for Greenbelt Authority Amon Mluwira said the company has lined up a number of measures to increase its production this year and beyond, which includes additional investment in sugarcane production in 6-thousand hectors.

“We are making good progress as a company, for instance last year we managed to produce 13-thousand metric tonnes of sugar but this year we are targeting 26-thousand metric tonnes,” he said.

The company started its operations in 2016, and since then its production has been increasing in each milling season.

The Tobacco Commission (TC) says 2019/2020 marketing season of the country’s green gold, tobacco, will still open on Monday, April 20, despite the pending lockdown due to the Coronavirus Disease (Covid-19) outbreak.

State President Arthur Peter Mutharika and the Minister of Health and Population Services Jappie Mhango announced on Tuesday night that the country is to effect a 21 days’ national lockdown from next Saturday in a quest to curb further spread of the pandemic.

However, speaking to Mining and Trade Review, TC’s Corporate Planning and Development Manager Hellings Nasoni said the 2019/2020 tobacco market season will still open but “will operate in line with a special directive issued by the Health Authorities.”

Nasoni said: “The Commission and other Industry players have stepped up measures to ensure balanced operations during the process, among others; farmers themselves will be restricted from witnessing marketing proceedings at selling floors and everyone carrying out various operations during the process is required to put on protective gears as prescribed by health officials.”

“Throughout, the process we will continue to complement government efforts to prevent further spread of the virus by abiding by health and safety measures as directed by relevant Authorities.”

To ensure transparency during the process, Nasoni said “the commission will closely work with Tobacco Growers Association who will be representing farmers at selling floors, while sole farmers will be represented by Auction Holdings Limited (AHL) officers who will be available at the floors.”

AHL has also introduced a special number that farmers can dial to check status of their tobacco at the market floors among others; the price at which it has been sold and the name of the buyer.

The first market to be opened will be Lilongwe Auction Floors followed by Chinkhoma on April 21st then Limbe on April 27th and finally Mzuzu on May 4.

Tobacco remains the biggest cash crop in Malawi. During last season a total of 165 million kilograms of tobacco was sold realising US$237 million in revenue. About 155 million kilograms of tobacco is expected to be sold on the market this year.

In a bid to regulate prices of agricultural commodities on the local market, Malawi’s Ministry of Agriculture and Food Security has announced minimum farm-gate prices of crop produce for the 2019/2020 agricultural season.

The minimum price for maize is K200 per kg, polished and unpolished rice at K600 and K280 per kg respectively, Soya beans has been pegged at K300 per kg while pigeon peas is at K240 per kg.

Announcing the prices in Lilongwe, Minister of Agriculture and Food Security Francis Kasaira said: “The Ministry is mandated to regulate prices of agricultural commodities in the country. This is achieved through the release of minimum farm-gate prices at the start of each selling season to ensure that farmers are not exploited by the unscrupulous traders.”

“At the same time, this measure ensures affordable prices to consumers. Regulation of agricultural commodity prices ultimately is key in improving incomes of farmers and achieving food and nutrition security in the country.”

The Minister said the minimum farm-gate prices are determined through a consultative process involving key stakeholders in the agricultural sector.

Among other things, the Ministry undertakes a cost of production survey in all districts across the country which involves collecting data on production costs from sampled smallholder farmers on selected crop enterprises, then the data is used to compute gross margins and break-even prices.

“To determine minimum farm gate prices, the Task Force team comprising key stakeholders such as members of the public, private, civil society and farmer organizations further scrutinize the breakeven prices for the selected crops. A markup profit usually set between 10-30% on the break-even price is considered to arrive at the minimum farm gate price,” he said.

Meanwhile, government has bankrolled the Agricultural Development and Marketing Corporation (ADMARC) to commence purchasing maize from Thursday April 9 in the southern region, April 20th in the Central Region and April 27 in the Northern Region.

Ecobank Malawi says political conflicts in the aftermath of the 2019 presidential elections and the global impact of the Corona Virus Disease (COVID-19) pandemic have created waves of uncertainties to the local economy.

In the bank’s audited financial statement for the year ended December 2019 signed by MD Charles Asiedu and Chairman Leonard Chikadya, the Bank says despite the challenges, it remains committed to delivering on its mandate in Malawi.

It says: “In the year 2020 and beyond, the bank will accelerate the sale ofits world class digital solutions targeting every Malawian.”

“It will provide more convenience to its customers by improving on its existing product lines and introducing new ones. It will also continue to play leadership role in the key sectors of the economy by leaving its partnerships around the world.’’

Ecobank says it is cautiously optimistic about the future and will continue to make the appropriate investments to bring more value to its customers and other stakeholders.

‘’We are pleased to present the audited summary financial results of the Bank for the year ended December 31, 2019. These summary statements supersede the version that was published on March 23, 2020,’’ says the Bank.

The report indicates that the Bank continued growth trajectory in 2019 despite the economic conditions of the year which were characterized by the low interest rate regime and uncertainties in the operating environment arising from effects of the general elections.

The Bank’s operation income grew by 14% to k19.7billion both funded and non-funded sources. Due to continued strategic cost management, operating costs increased by a lower rate of 7% to K8.7 billion resulting in a better cost to income ratio of 44%.

Impairment losses on loans and other assets reduced by 26% to K1.5billion mainly arising from improved risk management practices. Consequently,profit before tax grew to K9.5 billion representing 33% growth while profit after tax increased by 42% to k7.1 billion.

The total assets remained stabled at k262 billion principally driven by the funding from borrowed funds which grew by 37% to K82 billion. The loan book increased to K43 billion representing growth of 13% which underlined the Bank’s commitment to support the growth of the economy.

EGENCO says it is uncertain on when one of its four machines at Kapichira Power Station will get back online as its spare parts are failing to find a flight through which they can be shipped from Germany due to the Corona Virus outbreak, which has culminated into the suspension of many international flights.

This was revealed on Friday March 27 during a familiarisation tour of the power Station by the newly appointed Minister of Energy Atupele Muluzi.

Egenco CEO William Liabunya said the power generation company is currently maintaining two machines at Kapichira site that contribute 64.8MW to the national grid but spare parts for one of the machines are failing to arrive in the country from Germany where they were manufactured due to cancellation of flights amidst COVID-19 pandemic.

Liabunya said: “The company ordered some spare parts to be manufactured in Germany, and we are told that they are ready, but due to the pandemic it has been difficult to transport the parts into the country, and we were also anticipating commissioning engineers for these parts to come from Germany whose travel depends on the COVID-19 situation,” he said.

“The pandemic has also affected the country’s power construction projects including Likoma and Chidzumulu Island Solar hybrid projects which have been halted as the contractor is from China and is failing to ship in some required equipments.”

However, Liabunya said EGENCO is, currently, installing repaired parts of one machine that underwent specialized repairs in South Africa and arrived in the country on Wednesday March 25.

“At least we are on course of installing repaired parts for one of the machines that have arrived in the country before movement restrictions were effected in South Africa and we are expecting to complete this task within the next 10 days, where upon its completion 32.4MW will be added to the national grid,” he said.

Meanwhile Egenco is set to review its quarterly strategic plan, in which among others, it is to table various power projects including Salima Solar and Kamwamba Coal fired.

Muluzi commended EGENCO’S efforts made to install and repair malfunctioning machines which he said will help to mitigate load shedding.

“It was extremely important as a Minister of Energy to ascertain what is really causing continued blackouts in the country but good news is that parts are in, being fitted and an additional 32.4MW will be added to national grid in the course of a week or so,” he said.

Muluzi reiterated that his Ministry is also working with ESCOM and other key stakeholders to find long lasting solutions to load shedding as well as ensure more reliable power.