UK aid money spent trying to boost British role in Malawi oil sector

Lake Malawi, a Unesco protected site, is believed to have large oil deposits. Photograph: LatitudeStock – Patrick Ford/Getty Images/Gallo Images

The British government spent thousands of pounds of aid money on a project aimed at “establishing the UK as the partner of choice” in the nascent oil and gas sector of one of the world’s poorest countries.

Malawi is believed to have substantial oil deposits, including under Lake Malawi, a pristine freshwater lake – the third largest in Africa – whose southern shores are a protected Unesco world heritage site. Unesco has warned that any oil activity near the lake risks causing an ecological disaster.

Kate Osamor, the shadow international development secretary, said the project raised “real concerns” about development spending being geared towards boosting British trade, potentially at the expense of sensitive habitats.

Under Theresa May’s government the focus of development assistance has shifted towards boosting British interests, with the international development secretary, Priti Patel, saying in September that aid spending should serve both “the poorest people in the world and the taxpayers who foot the bill”.

A document obtained by Greenpeace through freedom of information laws and shared exclusively with the Guardian show the Foreign Office spent nearly £30,000 of overseas development assistance funding on a project supporting Malawi’s government in developing the country’s oil and gas sector. The document, written before David Cameron left office, shows that boosting British commercial interests was already an important part of the Malawi project.

The money came from the Foreign Office’s prosperity fund, which includes among its policy goals a commitment to “work for a secure transition to a low carbon economy”.

Osamor said: “The issue isn’t the amount of money – £30,000 isn’t a lot in aid terms, although of course it’s a lot to the average person in Malawi. But using money that’s supposedly for sustainable development to encourage oil exploration seems highly questionable.”

Greenpeace’s senior climate advisor Charlie Kronick told the Guardian: “The UK government is using aid money supposed to promote, among other things, clean energy and climate projects to help the fossil fuel industry that’s causing the climate problem in the first place.

“What’s worse, this is happening in a country that’s extremely vulnerable to climate change and where oil exploration is largely concentrated around Lake Malawi, a Unesco world heritage site and one of Africa’s largest and most biodiverse lakes.”

He added: “Instead of using aid money to grease the wheels of the fossil fuel industry, the UK government should help Malawi develop the clean, sustainable energy sources many African countries are racing to exploit.”

The document lists among the project’s advantages creating a “more competent playing field to allow UK companies to compete fairly in a sector in which we are traditionally strong”, and notes that “UK commercial opportunities should emerge through supply chain development”.

Jack McConnell, the former Scottish first minister who helped develop a wide-ranging partnership between Scotland and Malawi, said: “Malawi faces a huge budget deficit and I am sure the UK government would like to help the country diversify its economy away from dependency on agriculture, and tobacco in particular.

“But they have to be very careful that they are helping Malawi and not helping British companies exploit Malawi.”

Osamor said: “I have real concerns when aid appears to be tied to trade like this. We should be working with emerging democracies but taking care not to destroy their habitation. We’ve seen this fail in Nigeria, where a country got so dependent on oil that the environment is destroyed.”

A spokeswoman for the UK government said: “The UK government’s aid funding for Malawi was not linked to UK business interests, and the UK has a clear commitment to keep aid untied … By fostering sustainable economic growth in Malawi, including exploring opportunities in oil and gas, we will help eradicate poverty, create jobs, increase revenue and reduce dependency on aid. This is firmly in the interests of Malawi and the UK.”

Kate Osamor
Kate Osamor said government must be careful ‘they are helping Malawi and not helping British companies exploit Malawi’. Photograph: Danny Lawson/PA


Malawi’s government took its first steps towards establishing an oil industry in 2011, when it issued exploration licences for six oil blocks, two of which overlap with the lake. Two of the blocks, including one overlapping the lake, were awarded to a British company, Surestream, although by May 2015 it had sold 80% of its stake and the operatorship to Hamra Oil Holdings, a company from the United Arab Emirates.

All permits were frozen in late 2014 to allow the attorney general to review the licences. But in February this year, four days before a visit by the Scotland secretary, David Mundell, in which he announced £4.5m of additional aid, the president, Peter Mutharika, ended the ban on oil exploration.

Unesco is alarmed by the prospect of oil activity on Lake Malawi, issuing a statement in which it warned: “An accidental spill would pose a potentially severe risk to the integrity of the entire lake ecosystem including the aquatic zone and shoreline of the property.”

It called on companies holding blocks that overlap with the lake to commit to not exploring for oil or gas in protected areas.

“Lake Malawi is an international treasure, with real potential,” said Lord McConnell. “Malawi has extreme poverty and needs economic development, but that has to be balanced with the importance of protecting the lake environment and its biodiversity.”

A spokesman for Malawi’s high commission in London said: “The government of Malawi cares about Lake Malawi and would not want at any point that Lake Malawi would be polluted in any form. Every care will be taken as technology today makes it possible to drill oil in a body of water without causing catastrophic environmental consequences.”

Drilling would only happen after a “proper environmental impact assessment” had been conducted, he added. “The fear of pollution is understandable but not necessary.”

Source: theguardian