Energy
Petroleum policy awaits cabinet approval
May 18, 2020 / Wahard Betha
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.
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