Mining & Trade News

Minister of Energy Newton Kambala says he is considering plans to initiate the development of nuclear energy as part of diversification of energy sources to deal with power interruptions and blackouts which are having a knock-on effect on the growth of the country’s economic sectors.

Nuclear is produced through enrichment of uranium and Malawi has the Kayelekera Uranium Mine in Karonga, which is being operated by ASX-listed Lotus Resources, and a number of sites with uranium anomalies.

In an exclusive interview with Mining and Trade Review, Kambala said government is pushing for diversification of power sources because the country’s power crisis is as a result of overdependence on the hydro power from the lone source, Shire River.

He said hydro power generation is prone to natural fundamental vulnerabilities largely from the climate change effects including drought and flooding which greatly affects production.

 “We are exploring nuclear as a possibility in Malawi electricity generation and several companies have expressed interest in this,” he said.

Government is also working on diversifying sources of power to renewable sources such as solar, wind, geothermal and waste to energy.

Kambala said government committed a couple of Solar Independent Power Producer (IPPs) which would have come on stream by April 2020 but failed due to complications related to the Covid-19 pandemic travel restrictions.

He said in the medium and long term, Government has signed PPAs for IPPs committed to supply power from various sources such as wind, coal, and geothermal sources.

Government is also preparing to build interconnectors with Mozambique and Zambia in order to be able to tap power from the neighboring countries, the Southern Africa Power Pool (SAPP) and Eastern Power Pool (EAPP) when the Songwe River Power Generation project is finalized.

Kambala, nonetheless, said the energy diversification drive will not absolutely do away with hydro power as government plans to source more stable power from the planned Kholombidzo and Mpatamanga projects which will be supported by environmental protection initiatives started during the United States of America (USA) funded Millennium Challenge Corporation power project.”

He also disclosed that currently there is Shire Environmental Protection Trust, a body which ensures that the catchment area of the river is conserved to avoid excessive silting.

Kambala said the weeds problem that blocks power generating machines almost every year is being managed by the country’s power generating company Electricity Generation Company (EGENCO) through the EGENCO harvesters at Liwonde in Balaka district.

He said: “The hydro source still remains a feature in the Country’s Power Plans because we have lots of potential sites across the country.”

“Accordingly, Government will in the medium to long term implement additional hydro projects on other rivers such as Fufu and Songwe rivers,” he said.

Kambala said government has embarked on a campaign to encourage mutual participation of the IPPs who would bring along their own financing for the power projects in the country.

He said: “These IPPs will go into carefully negotiated contracts with government through Power Purchase Agreements (PPAs) for the benefit of the sector and the nation. Government now encourages the use of private financing in addition to the public finance sources.”

“We will continue to go into partnerships with the private energy companies or financiers for the development of the strategic power plants. Government is already currently developing the Mpatamanga Power Plant in the PPP format.”

The Minister said government intends to structure more large power generation projects in a financing model similar to that of Mpatamanga Power Plant which involves bringing on board strategic financial partners from the private sector.

“Government is looking at the short, medium and long term measures of improving the power supply to the general public and to the industry in particular,” he said.

Kambala said in the short term the country will continue to rely on the emergency solution of generators to fill the generation gap from hydro sources while it is monitoring diversification programs for delivery.

On the issue of political influence which has all along affected operations of state owned companies such as Electricity Supply Corporation of Malawi (Escom) and EGENCO, Kambala said government will ensure that the companies have capable professionals to follow applicable laws, policies and guidelines.

He said: “As a Minister, I will be engaging Board of Directors for parastatals in the Energy Sector to ensure that they understand clearly government expectations and that they will be held liable for the performance of the Institutions.”

“The Board of Directors will have to commit to the performance of their companies and they will be appraised against clearly laid down Key Performance Indicators (KPIs).”

The Minister hailed ESCOM for the campaign conducted against illegal electricity connections which has resulted in the arrests of the culprits.

Kambala, however, pointed out that most of the illegal connections were done due to the long waiting time before being connected by ESCOM, and said that his Ministry already instructed the body to ensure that all applications for connections are cleared to cut off the demand for the services.

Besides ensuring fairly quick electricity connections to customers after application, the Minister is also pushing for improved response time to faults, and improved customer care at Escom.

The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says its random survey has unveiled that many local consumers consider imported goods as being of higher quality, a tendency which is hindering the “Buy Malawi Strategy” from meeting its goal.

MCCCI’s Head of Membership Development and Communications Tione Kafumbu said the Malawi Government needs to scale up sensitization campaigns on the strategy to support growth of local industry.

Kafumbu said: “The awareness campaign should focus on convincing local consumers on the importance of buying locally produced products. Additionally, government has to be exemplary in its procurement processes through giving local preference to locals, and the general public will adopt the same trend.”

But the Ministry of Trade has differed with MCCCI in a separate interview saying Malawians have responded positively to the strategy such that local producers are easily finding a market for their products.

Spokesperson in the Ministry Mayeso Msokera said the exercise has also encouraged local producers to start producing goods of high quality to substitute foreign products.

He also said the strategy has assisted local manufactures to find markets for their products in other countries across Africa, Europe and Asia.

Msokera said the strategy is benefiting locals at producer, consumer and government levels.

He said: “Our producers are able to earn a living since they are able to sell their products, and consumers are now being supplied with goods of high quality hence government is able to collect more revenue in form of taxes.”

“The Ministry assesses each and every product to ensure that it meets our standards.”

The Ministry of Trade has since called on companies and industries to register with the Buy Malawi Strategy for them to start making progress in their operations.

Malawi’s Roads Fund Administration (RFA) is advancing with preparations to construct a state-of-the-art office complex in the Capital City, Lilongwe.

RFA is currently seeking expressions of interest from suitably qualified firms to provide project management service which will include architectural, engineering, design and construction consultancy services.

CEO for RFA Richard Manjanja says the interested firms must provide information that they are qualified to perform the assignment by including the in their submission the firm’s profile, the description of similar assignments undertaken, traceable client references, profile/curriculum vitae of key personnel and project team leader that will be responsible for the overall coordination of the assignment.

Manjanja says the qualified firms shall have a minimum of ten years of experience in providing similar services to those required in this request for the expression of interest.

The firms must have handled at least three similar assignments in the last 10 years, and the information on evidence of previous experience and expertise shall include; the names of project and clients, brief descriptions of scope of work and projects contract values.

He states that the Consultancy shall provide at least three traceable references of past clients for which similar services have been provided including; the addresses, contact persons, contact numbers and email addresses.

‘’It is expected that the firms shall be registered with the National Construction Industry Council (NCIC) and shall give evidence of tax compliance with the Malawi Revenue Authority (MRA).’’

The Consultancy will cover the following three phases; Phase 1, Conceptual drawings and preliminary designs, Phase 2, Detailed designs and bidding document and finally phase 3, the Construction supervision.

The Consultants are expected to specifically carry out the following; Review the conceptual plan/brief of the requirements for the office complex as drafted by RFA Management, Develop the conceptual drawings and preliminary designs for the office complex, Generate detailed architectural, structural , mechanical, electrical and plumbing designs for the office complex, produce bidding documentation to the facilitate the procurement of a competent contractor for the project and Supervise construction of the office complex to completion and finally handover the building to RFA as a client.

‘’Bidding will be in accordance with the Government of Malawi National Competitive Bidding (NCIB) procedures,” Manjanja says.

The deadline for submission of bids is September 4, 2020.

Malawi’s Electricity Generation Company [EGENCO] says construction of the Mpatamanga Hydroelectric Power Plant on Shire River will start in early 2022.

Senior Public Relations Officer for EGENCO Moses Gwaza says the power utility in coordination with the Public Private Partnership Commission (PPPC) is currently working on identifying a private strategic partner for the project which will be implemented in a public private partnership (PPP) mode.

“As part of the financing for the project will come from World Bank, the Bank has their own procedures which are progressing in parallel with the strategic partner identification process,” he says.

Gwaza says EGENCO is determined to continue with the project though the coronavirus (Covid -19) pandemic is affecting some ongoing processes.

“We will of course implement Covid-19 prevention measures as well as the safety measures of the projects of this magnitude. Since at this stage most of the processes are negotiations, these are continuing on virtual modes,” he says.

The PPPC announced in June this year that it had prequalified a consortium comprising SN Power Invest Netherlands B.V and Electrite De France SA (SN Power and EDF SA) as a strategic investor for the project.

Gwaza dismisses fears that participation of international private investors in Mpatamanga will translate to higher cost of electricity in Malawi as the investors will be looking for profits.

He says: “Ideally any investor experts returns on his or her investment. But this should cause no worry as government has the interest of Malawians at heart that is why it is involved in the project through EGENCO.’’

 “In other words, while ensuring that there is a return in the investment by the private investor, government will ensure that the prices are realistic and in the best interest of Malawians,

The Mpatamanga power supply project will have a main dam within the Shire river which will produce 309 megawatts. There will also be another regulating dam where 41 megawatts will be produced. This regulating dam is designed in a way that it will help to prevent flooding downstream of shire river especially during peak hour when maximum production is in progress.

Lack of adequate and reliable power supply from the national grid is one of the major factors hindering investment in heavy industries such as large-scale mining in Malawi.

The mothballed Kayelekera Uranium Mining in Karonga, which remains the country’s biggest mining investment, is powered by diesel generators which is more expansive for the company in comparison with utilization of power from the national grid.

My Bucks Banking Corporation says it is scaling up utilization of digital banking platforms in order to offer consistent and relevant customer services amidst the novel coronavirus (Covid-19) pandemic.

In a summary of unaudited financial results for the half year ended June 30th, 2020, the banking group says it plans to embark on the journey towards becoming a truly digital bank by offering enhanced digital platforms amid cost reductions, and ease doing business while passing on the benefits to the customers.

“In order to achieve excellent customer experience, the Bank will also focus on the rationalisation of its cost base, the effective and prudent management of risks and liquidity, the diversification of its balance sheet, blended with efficient portfolio allocations, which will effectively result in the maintenance of a robust capital position,” says the Bank in a statement signed by Board Chairman Francis Pelekamoyo and MD Zandile Shaba.

It forecasts that Malawi’s macroeconomic outlook is expected to remain stable for the most part of the year 2020 while the growth path for 2020 rests much on what happens in the remaining months as the country continues to be challenged with increasing cases of Covid-19 pandemic.

My Bucks states that despite the challenges generated by the Covid-19, monetary authorities in the country are committed to keeping a low inflationary environment objective in the medium term.

Economic growth is expected to be driven from agriculture, manufacturing, mining, construction and transportation sectors.

It says: “There has been significant improvement in the power sectors that will ably anchor the sectoral growth prospects.”

“The current framework being implemented by the monetary authorities is also a catalyst of growth, as the objective of a lower interest rate, inflation and stable currency environment is currently reality.”

In the financial year under review, My Bucks successfully concluded the acquisition of 100% shareholding and claims of the Nedbank Malawi which is a strategic development for the group to expand its retail product offering across the country in areas where it did not have presence before.

It says: “The additional points of representation will be enhanced with digital product offerings in a number of areas with an overarching aim of achieving customer satisfaction to our focused segment of the market for both domestic and foreign currency banking products and services.”

“The group will also continue to expand using organic growth acquisitions and mergers where valuable opportunities exists in the Malawi market and the region as part of its expansion strategy.”

Meanwhile, the global economic growth for 2020 has been revised downward to 2.4% from an earlier projection of 2.9% enticing the slowdown in global economic activities following the coronavirus pandemic.

Malawi’s general macroeconomic operating environment for the first half of the year has been stable despite the country registering fewer covid-19 cases at the beginning of March 2020.

My Bucks bank has recorded a profit after tax of MK1.8 billion in the first half of the year 2020 surpassing MK817 million the same period in June 2019, representing 130% growth.

The group registered an asset growth of 70%, to MK100 billion from MK59 billion in June 2019, and the main driver of growth has been the loan book which grew by 63% to MK34 billion from MK21 billion same period ended June 2019.

My Bucks also recorded growth in customer deposits of 98% year on year.

On account of growth in the asset base, the total interest income for the first half of the year was 7% higher compared to the same period last year, while credit impairments reduced by 7% to MK191 million from MK204 million year on year.

The group’s operation costs in the first half of the year grew by 84% year on year to support the growth of the group after the successful acquisition of Nedbank Malawi, combined with business rationalisation costs and the expansion of the points of representation of the My Bucks Brand across the country.

Ecobank Malawi says its profit before tax grew by 5% to K5.4-billion while profit after tax increased by 8% to K4-billion in the financial year ended June 30.

In a summary unaudited financial statement for the year ended June 30, 2020 signed by MD Charles Asiedu and Chairman Leonard Chikadya, the financial house says the results manifest resilience of the Bank in light of the coronavirus (Covid-19) pandemic and political instability owing to the disputed 2019 elections, which had a knock on effect on business.

“The financial performance underscores the resilience of the Bank arising from our leadership position in trade finance, the digitization of our products and services and better efficiency in delivering our customer-centric services,” says Asiedu.

He states that in the year ended June 30, 2020, the Bank’s operating income at MK9.6 billion declined year-on-year by 8% on account of slowdown in business due to the political uncertainty and Covid-19.

Asiedu says benefiting from continued strategic cost, management and reduced business, operating costs were flat year-on-year at Mk4.2 billion resulting in cost to income ratio of 44%.

He also says impairment loss charges reduced year-on-year by 96% to MK54 million arising from improved risk management practices.

The Bank’s total assets increased to K278 billion representing growth of 19% which was driven by an increase of 13% in deposits from customers and funding from other banks which grew by 54% to MK124 billion.

The loan book decreased to K35 billion representing a reduction of 8%, which resulted from lower utilization of facilities by the bank’s major customers.

During the year under review, the Bank was awarded the Banking Brand of the Year 2020 while its MD scooped the Banking CEO of the Year from the Global Banking and Finance of the UK.

“The awards underpin the confidence that customers, stakeholders and the public have in the Bank and its leadership,” says Asiedu.

Meanwhile, the Bank has projected a challenging economic outlook in the second half of the year 2020 due to Covid-19 whose cases are increasing at an alarming rate in the country.

Asiedu says: “Accordingly, earlier projections of Gross Domestic products (GDP) growth, inflation, interest rates and exchange rates may be negatively impacted by Covid-19 in the short to medium term.”

“The ushering in of a new government after the fresh presidential elections could affect policy making and implementation. The Bank has put in place strategic initiatives aimed at mitigating the effects of Covid-19 on the Bank and staff.”

The Bank is accelerating the sale of its world class digital solutions targeting every Malawian in the second half of the year.

 “We are cautiously optimistic about the future and we will continue to make the appropriate investments to bring more value to our customers and other stakeholders,” says Asiedu.

The Malawi Government says it is advancing with the procurement process for the long-awaited construction of Mpatamanga Hydropower plant on Shire River following the prequalification of a consortium comprising SN Power Invest Netherlands B.V and Electrite De France SA (SN Power and EDF SA) as a preferred strategic investment partner for the project.

Acting CEO for Malawi Public Private Partnership Commission (PPPC) Audrey Mwala says the Commission is currently assessing documents submitted by the consortium to determine their capability to invest in the project.

Mwala says the procurement stage will go on up to early 2021 when the investors and the Commission are expected to kickstart the process to identify a contractor to execute the project.

“This contractor identification process will cost us almost half a year since we will be looking at a number of factors in identifying the construction company,” says Mwala.

She says PPPC is committed to ensure that construction of the plant starts as soon as the contractor is identified.

Malawi is backing on the power plant to increase its electricity generation capacity to do away with the electricity blackouts emanating from the load shedding programme that the Electricity Supply Commission implements to ration power supply.

A local economic expert says operationalization of the Control of Goods Act (COGA) by the Ministry of Trade will enhance local industrial productivity and ensure transparency on trade system.

Ministry of Trade has enacted COGA, a law to regulate Malawi’s importation and exportation of goods through imposition of restrictions, banning or allowing of exports or imports under licences.

According to the Press statement from the Ministry,” the law came into operation on July 10, 2020 following Publication of the Act in Government gazette on July 16,2020.”

“The new Act serves as a departure from old Act in that it brings in predictability, certainty and transparency which will facilitate Investment into doff sectors of the economy without interruptions,” reads part of the statement.

Speaking in an interview, Former Executive Director for Economic Association of Malawi(ECAMA), Edward Chilima hails the Ministry for effecting the law saying it is amongst trade interventions that were supposed to be imposed long time ago.

He says: ” This is a welcome development as it is to bring sanity on imports and exports, having noted that many tend to import goods of which basically we are not supposed to be importing, since these can be locally produced and distributed.”

“This will ensure that we import and export goods in line with national development and economic goals, as some goods are also not supposed to be exported to other countries for strategic reasons.”

Chilima, therefore, urges the Ministry to intensify monitoring measures to press on stakeholders involved in trade including Banks, Malawi Revenue Authority and Immigration department to adhere to the Act.

Meanwhile Malawi’s exports to the East African market are expected to be enhanced during and beyond the Covid-19 pandemic period, following Britain’s offer to support the Trade Mark East Africa (TMEA) project with $50 million.

TMEA was established as a non-profit making institution for aid for trade delivery in East Africa.

Among others, the project is to foster reduction of costs and time of trade and ensuring that Malawian products are competitive on international markets.