Mining & Trade News

The Electricity Generation Company (EGENCO) says it is exploring alternative power sources to supplement power that it currently generates from hydro-plants.

EGENCO CEO William Liabunya said in an interview at the launching ceremony of the Company’s 15 years strategic plan in Blantyre that EGENCO wants to have diverse sources of power in order to do away with load-shedding due to unsteady supply of power as the hydro sources are prone to climate change related problems including diminishing water levels in the Shire River.

Liabunya said: “There are a lot of avenues which EGENCO is exploring to boost electricity generation and one of them is diversification.”

 “We strongly believe it is time to diversify to other sources of power because as you are aware 90 % of the electricity being generated is hydro-electric power.”

“The biggest challenge we have is that each time the water level goes down, electricity generation is affected and in-turn power supply is affected. We, therefore, need to find alternative sources that are sufficient and reliable.”

Board Chairperson for Egenco Lloyd Muhara told Mining & Trade Review at the same function that as stated in its strategic plan, EGENCO will explore and promote the use of clean energy in order to deal with the problem of deforestation due to excessive use of biomass as a source of energy.

“We want to start generating reliable and diversified power by investing in new power plants in a sustainable manner,” he said.

In the plan, EGENCO has set an ambitious target of increasing its installed electricity generation capacity from 367.37 to 1,687.5 MW by 2033 and overcome the country’s electricity woes in 14 years. The strategic plan is for 2018 to 2033.

Meanwhile, the Economic Association of Malawi (ECAMA) has asked the Malawi Government to increase funding to the energy sector starting from the next budget in order for EGENCO and Electricity Supply Corporation of Malawi (Escom) to achieve their plans of ensuring stable and adequate supply of electricity.

ECAMA president, Chikumbutso Kalilombe made the statement during a pre-budget consultation meeting which was organized by the Ministry of Finance, Economic Planning and Development in Lilongwe and was presided over by Minister of Finance Joseph Mwanamveka.

Kalilombe said EGENCO’s ambitious plan to increase power generation will only be fully implemented with adequate funding.

“It is high time government invested directly into power production. Even if we do not sort out all woes now, we will have started,” he said.

He also said the government needs to be aggressive in its campaign to attract investors in power generation by speeding up the ongoing policy changes to accommodate independent power producers.

Malawi’s electricity demand is expected to grow to 600 MW in 2018, 950 MW in 2020, and 1,200 MW in 2025.

The energy sector spending as a percentage of GDP remained below one percent between years of 2016/17 and 2018/19, and is projected to average around one percent by 2030.

Though only less than 12% of the Malawi population is connected to the electricity grid, blackouts are the order of the day as Escom conducts a load shedding programme to ration power supply especially in dry season when water levels are low in Lake Malawi and the Shire River.

Various studies have identified lack of reliable power as the main factor hindering investment in major economic sectors including mining and manufacturing.

Egenco, which was born from the unbundling of Escom into two entities in order to enhance efficiency in the power sector, started its operations in 2017.

Since its formation, the Company has been active in carrying out maintenance and expansion of power plants including the Nkula A which has been modernized with funding from US’s Millennium Challenge Corporation.

EGENCO is also constructing Tedzani IV with funding from the Japanese Government and has planned a number of generation projects including the setting up of a coal fired power plant to generate 300MW.

Introduction

Currently several small wind power generators are installed and supplying power to Villages in Thyolo, Chiradzulu, Ntcheu, Nkhotakota, Nkhata Bay and Mzimba. Under this Village Electrification Project the total installed capacity is 132 kW of which 90 kW is from wind. The wind/solar hybrid installations are supplying up to 150 homes within a 2km radius in each village. However this shows that there is potential for large wind turbines which can generate electricity up to 5MW each.

Project Sites for Wind Power Generation

 – Lilongwe

Four sites were visited around Lilongwe old airport and Kamuzu international airport (KIA) where the Department of Climate Change and Meteorological Services has measured wind speed at 10 meter height for more than 10 years. Out of the four sites assessed, a place near Luke Daeyang Hospital was identified as potential site. The site is 12 km from Lilongwe; 2 km from the existing grid at Kanengo and the area is bounded by M1 road and the road going to Malawi Institute of Management. The average wind speed was 5M/s at the time of the visit to the site.

Ownership of the land is not yet known but it is suspected that it belongs to Kanengo Northgate Project. Efforts are underway to check with the Commissioner for Lands to determine ownership of that piece of land.  The site is near a hospital, but it is on the wind-ward side so the noise is unlikely to have much effect on the hospital. Adjacent to the hospital is a proposed site for a nursing school, but it is still recommended that the site should be assessed further because it is near to power grid, can easily be accessed by road and both the hospital and the nursing school are on the wind ward side.

Looking at the size of land available, it is recommended that four turbines of 2 MW each can be erected on this site making a total of 8 MW installed capacity. This is based on the fact that the spacing between adjacent wind turbine towers is 7-15 times the rotor diameter. This recommendation is based on the assumption that this piece of land stretches to the east where wind speed is anticipated to be the same.

 – Mzimba

A site in Mzimba was identified at Kanombo Hills, 8 km North West of MzimbaBoma. The site has an average wind speed of 8m/s at a height of 2 metres. The site is 8 km from the existing power grid at Mzimbaboma. The hills are under customary land therefore ownership of the land may not be an issue. Houses are far from the site and therefore there will be no effect of noise pollution on the population.

Based on the same principle that the spacing of wind turbines is done in relation to the rotor diameter, four turbines of 2 MW each can be erected on this site making a total of 8 MW installed capacity.

 – Mzuzu

Kaning’ina Hills were identified as a potential site for installation of wind turbines for power generation. The site has an average wind speed of 9m/s at 2 metres height. It is about 10 km from Mzuzu city and the existing grid.  Kaning’ina Hills are gazzetted under natural forest reserve hence the land is controlled by the Forestry Department. It is situated far from residential areas.

In view of these facts therefore, there will be no noise pollution effect on the population of Mzuzu City. The only problem would be the high cost of constructing access road to the top of the hills to deliver and maintain the wind turbines.

On this site, 5 turbines of 2 MW each can be erected giving a total of 10 MW installed capacity.

 – Chileka in Blantyre

Four sites around Chileka in Blantyre were visited and assessed. Out of the four sites, a place on top of the hills near Andiseni Primary School,  west of Chileka Airport, was identified as a potential site. The site is 20 km from Blantyre and 2 km from the existing power grid. The average wind speed is 3.5m/s.

The Andiseni Hill is under customary land which means ownership of the land for installation of wind turbines may not be a problem at this site. Houses are far from the site and therefore there will be no noise pollution effect on the population around Andiseni Primary School.

Two turbines of 2MW each can be erected on this site making a total of 4 MW installed capacity.

Malawi’s leading mineral sector consultants Akatswiri Mineral Resources in collaboration with Zomba-based Enviroconsult have successfully completed an environmental and social impact assessment (ESIA) study for oil exploration in Blocks 4 and 5, which are held by prospecting firm Rak Gas MB45.

The study, whose report has been submitted to the Department of Environmental Affairs for approval, involved community consultations in districts covered by the two blocks which include Machinga,        Mangochi, Dedza and Salima, and national consultations in the Capital City, Lilongwe.

Rak Gas contracted Akatswiri and Enviro-Consult to conduct the ESIA in preparation for seismic operations which will be conducted in the blocks to identify oil and gas traps.

Project Coordinator Hilton Banda says: “The seismic studies entail using a vibrator truck that sends a signal from the ground and recording truck to detect sediments and their depth. The technology uses geo phones mounted on the cable that transmits a signal to a computer.”

“There was, therefore, a need to undertake the ESIA to assess the environmental impact of the seismic exploration work and develop an environmental management plan that contains mitigation measures.”

Banda, who is CEO for Akatswiri, explains that the ESIA involved studies on Geology and Soils, Air Quality, Water and Hydrology, Waste Management, Noise and Vibrations, Transport and Energy needs, Flora, Fauna, Fish, Habitats and Land use, Archaeology and Cultural Heritage and Social Issues as key parameters that require baseline assessment in order to determine potential impacts and their mitigation approaches.

Geology and Soils

The Akatswiri CEO, who is a seasoned geologist, explains that the team conducted geological field mapping in which major lithological and soil units were mapped and sampled for subsequent mineralogical analysis.

He says the team recorded systematic measurements of structural features, field relations and cross-cutting relationships and in addition to field mapping they used existing geophysical data to interpret structural features which could not be seen on the ground as the ground is mostly covered by sediments.

The area is overlain by recent sediments of lacustrine in nature and has been affected by rift faulting which defines the Malawi Rift Valley. NE and NS trending faults, and shear zones present in the area may render critical insights into the structures which might trigger potential landslides or earthquakes.

The project site is dominated by the presence of marsh and agricultural soils. The soil fertility status is augmented through fertilisation to sustain crop production, and soils are moderately acidic.

“The impact assessment shows that the proposed project will have a low to moderate impact on the geology and soils in the study area,” Banda says.

Air quality

He says the air quality assessment was intended to characterize the existing environment and identify the environmental and social hazards associated with the seismic activities on air quality, assess the magnitude and significance of the risks (the likelihood of the hazard and the severity of the impact) and provide a description of the proposed control techniques to eliminate or mitigate the likelihood of the hazard or severity of the impact and development of plans / procedures to manage consequences of exceptional events.

“The results from the baseline survey show that levels of the major air quality parameters (total suspended particulate matter, SO2, NO2, CO and H2S) were below the guideline values according to Malawi Standards (MS737:2011) and World Health Organisation (WHO) guidelines. However, in most of the cases, levels of methane were noted to be significant, mainly arising from decomposition of livestock excreta,” he says. 

Hydrology and water quality

Banda says in order to assess hydrology and water   quality, water samples were collected from block 4 and 5 from boreholes, shallow wells, rivers and analyzed for physical-chemical parameters: temperature, pH, Total Dissolved Solutes (TDS), Electrical Conductivity (EC), Turbidity, F-, Cl-, NO3-, SO42-, carbonates, Na, Ca, Mg, Cu, Mn, Zn, K, and total hardness.

“The results were compared to the World Health Organization (WHO) and Malawi Bureau of Standards (MBS) standards to ascertain the water quality. Analysis of the data indicates that the major water quality parameters are deemed within guideline limits indicating that the water is generally unpolluted. The impact assessment shows that the proposed project will have a low to moderate impact on water resources in the study area,” Banda says. 

Waste Management

The ESIA Project Coordinator also assures that the   seismic surveys are not expected to generate waste streams with high environmental and social impact.

The common sources of waste streams pointed out in the study include presence of workforce, seismic survey activities and vehicle maintenance wastes.

Banda says the expected non-hazardous wastes include domestic wastes (garbage and sewage) and effluents, paper, line cables while hazardous wastes include pharmaceuticals, waste oils, spilled fuel and lubricants and used batteries. The potential impact of wastes is deterioration of water and soil quality affecting terrestrial and aquatic ecosystem (fauna and flora).

In mitigation, he says Rak Gas will implement a Waste Management Plan (WMP) in line with Open Government Partnership (OGP) guidelines for waste management (OGP, 1993; 2008).

Banda says: “As far as practicable, Rak Gas will use existing sanitary facilities in the target areas (otherwise mobile toilets should be used). Solid wastes will be segregated at source in terms of recyclable, reusable, biodegradable and non- biodegradable, hazardous and   non-hazardous, or disposal as appropriate. The Seismic Team will make sure that it does not leave behind any solid waste during the seismic activities.”

“Buffer zone distances between water and seismic lines, sanitary and biodegradable garbage pits will be observed as per International Association of Geophysical Contractors (IAGC) guidelines in order to protect the surface water bodies. Non-biodegradable, flammable wastes may be burned and the ashes buried with the non-flammable wastes. This burial should be at least one meter deep, with due consideration to the area’s water table.”

“All hazardous wastes will be isolated and collected for disposal in regulated municipal facilities. Although, the likelihood of major impacts from accidental spills is low, it is recommended to ensure that requirements of oil spill and emergency plans must be met before operations commence.”

Power utility Electricity Supply Corporation of Malawi (Escom) says it is making great strides in its preparations to start importing power from the Southern Africa region through the Mozambique – Malawi Power Interconnector.

CEO Alexon Chiwaya lauded the progress made on   the project after Escom signed five agreements with Mozambique power utility Electridade De Mozambique (EdM) to operationalize the interconnector.

The agreements include; Project Implementation, System Operating, System Maintenance, Wheeling and Power Purchasing.

The project will in its initial phase see Malawi importing 50 Megawatts (MW) from Mozambique.

Chiwaya said: “The signing of these agreements manifests that we are making satisfactory progress in the project.

“The Power Purchase Agreement (PPA) is for a period of five years while the Wheeling Agreement will take 20 years to cover the estimated period for the cost recovery of the investment for the line by EDM and renegotiation will take its course after the agreement period.”

Under the Wheeling Agreement, Escom will be paying EdM for the full cost of investment for the Mozambique portion of the interconnector, and the latter will in turn give Escom rights over the line.

He stressed that, if any other party wants to wheel power through the line, including EdM, appropriate      compensation will have to be worked out to Escom to offset the full cost that Escom will have been paying for the line.

Chiwaya also said though the project is intended to import 50 MW, the power demand-supply balance for Malawi shows that, due to delays in the implementation of major power supply projects in the country in the medium to long-term, Malawi will need to import about 200MW of power from Southern African Power Pool (SAPP) for two to three years after the interconnector is commissioned to cover the projected power supply deficit.

“Kindly be informed that ESCOM has already engaged ESKOM of South Africa on the proposed power imports for a short period of three years and required agreements are being drafted,” he said.

Chiwaya said availability of adequate power through the interconnector will make significant contribution to the growth of economic sectors in Malawi including manufacturing, agro-processing, the service sector and tourism.

He commended both EdM and Escom personnel for tirelessly working on the project preparations and responsible ministers from the two countries for the policy direction.

The CEO also thanked World Bank, German’s KfW, European Union and Norwegian Trust Fund for financial support towards the project.

“Let me assure the financiers and all stakeholders that we will sustain the investment and ensure that Malawi works towards attracting Southern Africa Development Committee (SADC) Member States to trade in power with the country,” he said.

Mozambique’s Minister for Mineral Resources and   Energy, Ernesto Tonela, said he was happy that the project that involved prolonged negotiations between the two countries has culminated into the signing of the necessary agreements.

“We will make sure that Mozambique exports power to Malawi and in future Malawi will also be able to export power to other countries as it connects to the power pool,” he said.

He assured Malawians that though the project will initially be selling 50 MW to Malawi his government is willing to increase supply according to Malawi’s demand.

The scope of the project is to interconnect Malawi-Mozambique power systems at 400kV through              transmission line from Matambo substation in Tete province in Mozambique to Phombeya substation in      Balaka District in Malawi.

The project will by default connect the nation to the SAPP thereby enabling the country to not only buy power from Mozambique but also from the Region.

The total distance from Matambo to Phombeya is 210km with 140km in Mozambique and 70km in Malawi.

The cost of the project is pegged at US$127-million, out of this US$$92-million will cater for the Mozambique side and US$35-million for Malawi.

Malawi, which depends on power generated from its hydro stations on the Shire River, is banking on the           interconnector to solve its power supply challenges emanating from low water levels.

Abstract

Malawi is a land of sunshine and areas of potential for solar energy installation span from north to south along valleys and lake shore region. Chitipa, Kasungu – Lilongwe Plain and the rift valley regions offer a lot of opportunities in investing in solar energy.

Solar energy installation is one way of improving Malawi’s energy mix to foster security of supply. Administrative procedures for obtaining licences and land need to be improved to ease the way of doing energy business. The paper provides initial data for investment decision making.

INTRODUCTION

Malawi continues to struggle to offer reliable and quality power supply. The Electricity Generation Company (Malawi) Limited (EGENCO) has an installed generation capacity of 406.6 MW out of which 335.15 MW is available. There has been a loss of about 165MW due to environmental degradation in the Shire River catchment area leading to low water levels and trash accumulation at hydro power plants.

In order to improve security of supply several solar power purchasing agreements (PPAs) with independent power producers have been signed to improve energy supply mix.

SOLAR ENERGY GENERATION

Solar Energy Generation was initially popularized by Mission Stations in rural areas. Government has installed solar systems in rural trading centres creating solar villages such as Chikweu in Machinga, Kansonga in Ntchisi, and Eswazini in Mzimba.

These targeted mostly key rural facilities such as Health Centers, Community Day Secondary Schools, and Community Halls. Solar Villages involving hybrid systems (Solar and Wind) were installed providing up to 21kW to provide power for a maximum of 150 homes. Even piped water supply systems were served by this hybrid system.

Recently the Japanese Government provided .83 MW of solar installation for electricity generation at Kamuzu International Airport in Lilongwe. Domestic installations are now common as a solution to prolonging load shedding of up to 10 hours experienced in most towns and cities.

Commercial supply of solar power systems are now encouraged.

Success of this initiative requires solar resource mapping so that large installations can be properly located. Detailed information on direct and diffuse radiation, sunshine days and periods of cloud cover help to appropriately size the large power generation solar systems. This solar resource assessment data is essential to understand the magnitude, geographic distribution, characteristics, and variability of the solar resources.

ESCOM is able to generate about 362 MW and has the capacity to accommodate 70MW of renewable energy in its grid. Off grid supplies are also viable.

AVAILABLE SOLAR DATA

The Department of Climate Change and Meteorological Services has recorded solar data for over 30 years using solar recording equipment.

Malawi has the most sunshine hours from April to November. The average annual sunshine hours of 7.5.

The World Bank did some solar resource mapping for Malawi between 2015 and 2018. The assessment was based on satellite-data analysis, global datasets and solar measurement at Chileka, Kasungu and Mzuzu.

There seems to be high levels of photovoltaic power potential in Chitipa, Karonga, Mzimba, Kasungu, Lilongwe, Salima, Ntcheu, Lake Chilwa area, Chikwawa and Nsanje.

Electricity Generation Company of Malawi (Egenco) has described effects of deforestation as the major hindrance to uninterrupted generation of electricity in hydro-plants on the Shire River where Malawi generates 98% of its power.

Speaking at the Role of Trees, Forests and Resilience Symposium in Lilongwe, CEO for Egenco William          Liabunya said effects of deforestation including soil erosion, aquatic weeds and trash disrupt the work of turbines in the reservoirs at the power stations.

“The suspended silt particles lower the volume of the reservoirs and reach the turbines to choke power production operations. They also block the cooling water system machines for the generation units,” Liabunya said.

Liabunya also said climate change related problems such as floods are a big threat to power production saying this year floods that hit the lower Shire affected many generating power stations resulting in power outages for almost a week in the month of February.

He said such occurrences are a stumbling block to the Government in the implementation of the Energy Policy which aims to improve efficiency, reliability and affordability of energy supply systems for socio-economic growth.

Liabunya, therefore, urged the Forestry Department to scale up implementation of the National Forest Policy which aims to control deforestation and promote sustainable management of forests in order to enhance socio-economic development.

He explained that if both the Energy Policy and National Forestry Policy are seriously implemented and harmonized with other policies namely Agriculture and Food Security Policy; National Land Policy; Land Resources Management Policy; Water Policy; Climate Change Policy and National Environmental Policy; deforestation can be prevented which would help EGENCO in sustaining uninterrupted power production.

In its reforestation drive, in January this year EGENCO launched a trees planting exercise at Chibwana Village Traditional Authority Sitola in Machinga district.

By the end of this rainy season, EGENCO plans to plant 25-thousand trees along Shire River and tributaries.

Meanwhile, the Department of Energy Affairs says deforestation is a major concern in Malawi because the country lacks affordable and reliable alternatives to biomass, which is a major source of energy in the country catering for over 80% of the requirements.

Biomass energy is mainly used in water heating (cooking), tobacco curing, brick kilning, wastage in terms of charcoal residues, and in extreme cases of lighting.

In a presentation made at the Trees, Forests and Resilience Symposium in Lilongwe, Principal Energy Officer for the Department Cornwell Chisale observed   that almost all wood fuel and charcoal used for domestic requirements in Malawi is from natural forests which take long to regenerate and also due to frequent harvesting, regeneration is actually impossible.

Chisale, however, said the Department is promoting   alternative sources of energy including electricity (grid electricity and off-grid options including mini-grids), Gas (Liquid Petroleum Gas, natural gas and biogas), Bio-ethanol and Briquettes whose utilization will keep the country free from carbon emissions.

He explained that the drive to promote the alternative energy sources involves sound policy direction; lobbying for tax waivers for clean energy generation equipment, curriculum change to accommodate pro-clean energy subjects; introducing regulations that support clean energy use; and training communities, extension workers and institutions on alternative fuels.

He said the department is also conducting awareness campaigns on biomass utilization technologies through radio advertisements, cleaner cooking camps, open air functions, symposia and panel discussions.

The Department has, meanwhile, embarked on projects to promote alternative energy sources including         Malawi Rural Electrification Program (MAREP) which is extending the national electricity grid to rural areas, National Cook Stove Initiative to disseminate 2-million cook stoves by 2020; and increasing clean and affordable decentralized energy services to selected vulnerable areas of Malawi project which is to promote clean energy mini-grids as a means of electrifying rural areas.

Malawi is, currently, importing 3MW of power from Mozambique through Mandimba to Mangochi and 20MW from Zambia through Chipata and Mchinji.

The country is in discussions with Tanzania to import gas through Karonga to support the development of a 100MW Gas Fired Power Plant either to be operated by EGENCO or an IPP.

Malawi has engaged the Commonwealth Secretariat to provide technical assistance in developing the upstream petroleum sector following encouraging results that have emerged in oil and gas exploration across the country.

Multinational firms are conducting exploration for oil and gas in Malawi focusing on the country’s stretch of the African Rift system, which is an area with proven potential for oil and gas discoveries.

Government demarcated the stretch into six prospecting blocks and awarded Block 1 located in Chitipa and part of Karonga to South African firm EFORA Energy formally SacOilHOldings, Block 2 and 3 in Karonga, Rumphi, Nkhatabay and NKhotakota to Hamra Oil, Block 4 and 5 located further South covering Dedza, Ntcheu, Mangochi, Machinga, Mulanje, Phalombe and Blantyre to RakGas MB45 and Block 6 located in the Lower Shire Valley area to Pacific Oil and Gas.

Results from exploration work by Hamra Oil and RakGas have indicated great potential for oil discovery in Malawi.

“As a nation, we are very excited with the incoming results from oil exploration work being conducted by these tenement holders.  The likelihood of finding commercial petroleum discoveries in these potential sites is high with average values in the range of 16.8% – 20%, exceeding the typical international oil industry threshold of 10%,” says Head of Oil and Gas Desk at the Department of Mines in the Ministry of Natural Resources, Energy and Mining, Cassius Chibambo.

Chiwambo says the government has, therefore, resolved to re-engage the Commonwealth Secretariat to provide technical assistance in the development of a regulatory framework that will ensure that there is a win-win situation between Malawi as a country and the investors when oil is discovered.

He says a delegation of the Commonwealth Secretariat already visited Malawi for a scoping mission which was conducted from January 28 to February 1, 2019 as a first step in responding to Malawi Government’s request to provide technical assistance for the Oil and Gas upstream sub-sector.

The Malawi Government, specifically, requested for technical support in the following areas: Review of            Petroleum (Exploration and Production) Act of 1983;finalisation of the development of Petroleum Policy; developing a model petroleum sharing agreement (PSA); re-negotiation of the PSA that it signed with RAKGAS; development of a community engagement strategy; and capacity building.

Delegates from the Commonwealth Secretariat led by Victor Kitange, an Economic Advisor and AlacheFisho, a Legal Advisor held meetings with officials from the Oil and Gas team led by Chiwambo who briefed them on the status of the activities in Malawi.

They also met the Minister of Natural Resources, Energy and Mining AggreyMasi and other officials from his Ministry, and also officials from Department of Mines; Geological Survey Department; Ministry of Finance, Economic Planning and Development; Ministry of  Justice and Constitutional Affairs; Environmental Affairs Department; National Oil Company of Malawi (NOCMA); Ministry of Foreign Affairs and International Cooperation; and Ministry of Trade and Industry.

“In all the meetings conducted, participants were requested for their inputs in order to make the scoping mission comprehensive enough for successful implementation of the technical assistance,” says Chiwambo.

Some of the issues raised during the scoping mission include the need to have robust environmental management framework as most of the citizens have fears over Oil and Gas exploration and production activities.

It was also observed that there is lack of relevant work experience since the petroleum sector is just new in the country, as such there is need for trainings to enable civil servants and other stakeholders manage the petroleum sector.

“On the issue of reviewing legal framework, it was stressed that the essence is to ensure best practices in the sector so that the country is fully benefiting from the petroleum operations,” he says.

Some of the issues that are being reviewed in the Act include; licensing procedures, PSAs, and environmental management.

Chiwambo says that after the Petroleum Policy is developed, drafting sessions for the Petroleum Act will be intensified and the Ministry of Justice will need some support from Commonwealth.

He explains that though the Petroleum Policy is in the final development stages, the Petroleum Act will address issues stipulated in the policy as such the policy has to be finalized before drafting the new Act.

Previously, the Economic and Legal Section of the Commonwealth Secretariat provided technical assistance for the development of the Draft Petroleum Policy, which started with a situational analysis of the country’s Oil and Gas Sector.

Secretary for the Ministry for Natural Resources, Energy and Mining PatrickMatanda is quoted in the Draft Policy as saying that through this expert analysis, the problems and gaps in the upstream petroleum sector were identified, which assisted in the drafting of the policy.

“The draft policy was formulated through reviewing of policies from other countries particularly those sharing similar geological setting as Malawi, extensive consultations with various stakeholders including other government institutions, local authorities, private oil companies, civil society organisations and the academia,” says Matanda.

Among other grey areas identified in the Draft Petroleum Policy is the failure by the government to recruit the Commissioner for Petroleum Exploration and Production.

The Policy reads: “The current Petroleum (Exploration and Production) Act provides for the Minister for Natural Resources, Energy and Mining toappoint a Commissioner for Petroleum Exploration and Production within the Ministry to administer the Act. The post has never been filled and the functions of this office have been performed by the Commissioner for Mines and Minerals and the Department of Mines.”

“Thus, the oversight, development and delivery of an upstream petroleum policy in Malawi fall within the remit of these offices. But when it comes to the broader energy policy, the Commissioner for Mines and Minerals and the Department of Mines would work with the Department of Energy.”

The Draft Policy also points out the need to clarify the role of the National Oil Company of Malawi (NOCMA) which was established under an Act of Parliament and empowered to promote upstream and downstream petroleum activities.

“There would be need to clarify the exact functions and powers of NOCMA to ensure that they are not in conflict with those of the Geological Survey Department regarding oversight of petroleum exploration,” it reads.

The new law is expected to give NOCMA the mandate to manage government’s interest in oil production investments with preliminary proposals indicating that the parastatal will have at least 20% shareholding in the investments.

In a meeting with the Commonwealth delegation, CEO for NOCMA, Gift Dullah, recommended that relevant personnel from his organization, GSD and Departments of Mines acquire necessary training by, among other things, visiting countries that are doing well in the oil and gas field like Norway and Nigeria.

He said it is important that Malawi works on capacity building in the subsector to ensure the investment decisions are done properly in the field so that adequate returns are accrued for the nation.

Dullah also stressed the need for local content by ensuring that the oil ventures are buying local resources and where possible employing capable local people.

He said NOCMA is, currently, working with Malawi University of Science and Technology to introduce relevant courses in the field of petroleum.

Comsec is also expected to initiate communication with other countries to help in terms of training.

The Draft Policy has a section on local content which it highlights as a path to development through petroleum activities in addition to a sound fiscal regime that ensures sufficient revenue collection.

“Oil and gas companies, when purchasing goods and services for their operations, should be required to give first preference, at comparable quality, delivery schedule and price, to goods produced locally and services provided by Malawian citizens, or businesses, subject to technical acceptability of the relevant goods and services in the country,” reads the Policy.

It also calls for the participation of Malawians and Malawian companies in oil exploration, exploitation and related sectors.

The Policy provides opportunities for local companies to buy stakes in oil ventures and NOCMA to buy additional shares in the oil investments.

The Draft Policy also recognizes the need for the oil companies to carry out corporate social responsibility (CSR) programmes and sign community development agreements (CDA)with the communities in their respective project areas.

The Policy statement reads: “Government shall include CSR and CDA requirements in all contracts and in the petroleum legislation, encourage CDAs between the oil companies and affected communities, consider CSR history of companies when awarding contracts and encourage the participation of civil society organisations in oil exploitation issues.”

It says government shall also train or hire monitors to oversee the fulfillment of CSR and CDA obligations, impose stiff penalties for non-compliance, and engage international experts in the development of minimum requirements for CSR and educate local communities on the companies’ responsibilities.

In the drafting session, the Ministry will need capacity in the following areas; legislation drafting or second eye, vetting of the drafted legislation, and contract negotiation.

Government says the US$12-million Wovwe Power Station expansion project will more than double production from the station’s installed capacity of 4.5 MW to 10MW.

Public Relations Officer for the Department of Energy in the Ministry of Natural Resources, Energy and Mining, Saidi Banda, told Mining &Trade Review that such a development will help minimize the gap between demand and supply of power in the country.

Electricity Supply Corporation of Malawi (Escom)   supplies power sourced from Wovwe to Karonga, Chitipa, Rumphi and some parts of Mzuzu.

Electricity Generation Company (EGENCO), which operates the power station, engaged German firm, Fichtner in May 2018 to conduct a feasibility study for the expansion project with funding from the German Government, which is expected to last 18-months.

“The project will improve plant reliability as well as   extend its life to ensure that the people in the designed areas have sufficient and reliable energy for their needs,” says Banda.

Wovwe offers a diversified source of power for Malawi as the rest of EGENCO’s power stations are located on the Shire River.

Banda explains that after completing the feasibility study, Government and EGENCO will identify an Engineering Procurement and Construction (EPC) contractor for the expansion project.

Wovwe is designed to either connect to the national power grid or operate on off grid to only supply power to northern region districts.

The power station is located in Karonga District on Wovwe River, upstream of Wovwe Rice Scheme.

Besides the ongoing Wovwe Power Project, EGENCO is in the middle of soliciting funds for other       impending power projects including 138MW Kholombidzo hydro-power project on Shire River to cost US$11.5-million and 180MW Songwe Hydropower Scheme to be constructed on Songwe River based on a cooperation agreement between Malawi and Tanzania.

Malawi is experiencing power supply shortages due to environmental problems including decreasing water levels of the Shire River which has seen EGENCO reducing its production from the installed capacity of 351MW to about 200MW against a pick demand of 500MW.

EGENCO’s other power stations include Nkula, which was the first major hydro power station in Malawi and   comprises of Nkula A with three machines, each rated 8MW, and Nkula B with five machines each rated 20MW.

There is also the 92.7MW Tedzani Hydro Power Station located on the Shire River, 7km downstream of Nkula Hydro Power stations and comprises of three Power Stations: Tedzani I, Tedzani II and Tedzani III.

The other power station is Kapichira which has an installed capacity of 129.6MW.

Results from the on-going exploration for hydrocarbons that multinational firms are carrying out across Malawi have revealed encouraging preliminary prospects for the discovery of commercially viable petroleum and gas reserves.

Making a presentation titled “STATUS OF OIL AND GAS IN MALAWI AND OPPORTUNITIES” at the 2018 Alternative Mining Indaba that was held in Mangochi last month, AmiduMakwinja, an officer from the Mines Department’s Oil and Gas desk said that based on exploration results collected so far,    preliminary prospects for petroleum in the country are good and promising.

Makwinja explained that the outcome of geophysical and geological mapping exercises conducted by exploration companies in target areas such as Chitala and Mpatsanjoka in Salima, Dulombale and Golomoti in Dedza, Lake Malombe in Mangochi, Dwangwa in Nkhotakota and Vua in Karonga is positive.

“The likelihood of finding commercial petroleum discoveries in these potential sites is high with average values in the range of 16.8% – 20%, exceeding the typical international oil industry threshold of 10%,” he said.

The results have emanated from Phase I exploration work which has involved desk studies, airborne surveys, seismic surveys and data interpretation, geomapping for blocks on ground, and Environmental and Social Impact Assessment (ESIA).

The companies are now geared to move to Phase II which requires importation of drilling equipment to start preliminary drilling of exploration wells for determination of availability of hydrocarbons.

Assumptions are that the Oil and Gas reserves could be in the same range as those discovered in Ethiopia, Uganda and Kenya since Malawi lies in the East African Rift Valley System.

Makwinja said if Malawi makes Oil and Gas discoveries in the same order of magnitude as comparator countries, potential oil revenue estimates can be many times more than the current export earnings.

The country is using a comparative analysis of economies which have recently discovered oil reserves within the African Great Rift Valley to analyze its hydrocarbon potential.

The revenues are estimated assuming a long term oil price of US$ 60 per barrel as World Bank anticipates that   all three major benchmark oil prices, Brent, West Texas Intermediate (WTI), and Dubai, will continue to increase after 2020 to reach $70 per barrel by 2030.

Currently, Malawi’s macro-economic environment over-depends on the rain-fed agricultural sector which has proven to be unreliable due to fluctuating weather pattern.

This has led government to embark on hunting for potential alternate and complementary economy drivers, by going on over-drive promoting other sectors such as the Extractives Industry.

Within the Extractives Industry, government aims to develop the Oil and Gas subsector into one of country’s complementary economic spinners if commercially viable discoveries are made hence the demarcating of oil    prospecting area into Six (6) Blocks and subsequent issuing of Exclusive Prospecting Licenses (EPL) to four multinational firms.

Block 1 was awarded to Efora Energy (formerly SacOil Holdings Limited), Block 2 and 3 to Hamra Oil, Block 4 and 5 to RAKGAS MB45, and Block 6 to Pacific Oil and Gas.

However, Efora and Pacific Oil and Gas have since relinquished their licences.

Environmental and Social Impact Assessment for Hamra Oil’s Blocks 2 and 3 were completed and approved by Malawi’s Environmental Experts in the Department for Environmental Affairs paving way for Phase 2 exploration which requires drilling of exploration wells.

Makwinja said it is imperative that on-going petroleum activities are supported on a sustainable basis to achieve successful oil and gas discoveries which he said if well managed, its economic impact is likely to accelerate economic growth and development thereby reducing poverty.

Presently, all Oil and Gas exploration operations are based onshore and government has pledged that modern environmental management practices and methods will be implemented to minimize and mitigate against any disturbances to the environment.

Until Malawi builds its own regulatory and financial    capacity, government says the first phase for petroleum operations will focus on onshore including along the lakeshore.

Meanwhile, the Department of Mines is reportedly at an advanced stage in the process of formulating a Petroleum Policy that will among other things address issues of good governance for upstream petroleum subsector, promote balanced fiscal regime, good revenue management, and environmental sustainability as well as maximise local content.

“Currently, the draft policy is still undergoing intra and inter-ministerial polishing to ensure consistency with other policies before approval and adoption,” Makwinja said, adding that with the help of international experts like Commonwealth Secretariat, the review aims to meet international standards.

The Petroleum (Exploration and Production) Act of 1983 is also under review to reflect the current global petroleum issues.

Review meetings were conducted with several stakeholders and instructions from the meetings were submitted to the Ministry of Justice and Constitutional Affairs which is preparing the initial Petroleum Bill of the revised law.

Among other pertinent issues, the new law will put in place measures that will enable community members to take part in choosing kinds of projects befitting their areas as part of community development agreements.

The government has also partnered with the Exploration Companies in facilitating establishment of Oil and Gas courses at Malawi University of Science and Technology (MUST) and University of Malawi’s Polytechnic to enhance high human capacity and expertise in the petroleum subsector.

Malawi has already started benefiting from upstream petroleum activities having so far received significant developmental contribution both industrial and social since exploration companies were awarded the exploration licenses.

The benefits include supply of clean and safe water, interventions during disasters such as floods and supply of medicine and associated medical equipment.

The firms have also funded provision of sanitation and hygiene facilities such as toilets, construction of school blocks and provision of school material as well as promotion of sporting activities, which includes the establishment of Surestream Academy in Blantyre by UK prospector Surestream Petroleum.

Makwinja said government will continue putting more efforts to the current exploration activities until results are obtained on the status of petroleum resource potential in the country so that the country and its citizenry benefit from the imminent exploitation of the prized endowment.

“If Malawi can restrict exportation of Crude Oil and ensure refining of the same in the country, more jobs will be created, and it will make petroleum products readily available at a cheaper price,” he said.