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Issue 304 - 11 July 2015

Zambia: Banda acquitted

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A Lusaka magistrates court on 30 June acquitted former president Rupiah Banda, who had been accused of personally benefiting from a $2.5m oil deal with Nigeria’s Sarb Energy. Magistrate Joshua Banda ruled that the prosecution had failed to prove its case, and called the prosecution’s evidence inconsistent and contradictory.

Zambia
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The National Energy Regulator of South Africa (Nersa) began a two-day public hearing on 23 June on Eskom’s request for an immediate tariff increase. Of particular concern was the problem posed to municipalities of an immediate increase in the cost of the power they resell as they are no longer able to increase the sale price of electricity during the year. There were numerous calls for the government to consider raising funds by other means, in particular through private capital and additional debt. However, Eskom chief executive Brian Molefe rejected privatisation for the time being. Nersa is set to make a decision on the application on 29 June.

South Africa
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Barely 100 days into his presidency, President Hage Geingob has ordered new mines and energy minister Obeth Kandjoze to pull the plug on a costly 250MW emergency power station in the Erongo region that was to provide back-up for the uranium mining industry during peak demand periods. The official reason given was a sharp escalation in projected costs after Xaris Energy, which won the hotly contested tender last year amid accusations of corruption, announced in early May that the cost would double from N$3.5bn (about $270m at the time of the bid) to an eye-watering N$7bn.

Namibia
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President José Eduardo dos Santos’ billionaire elder daughter Isabel has added to her portfolio with a controlling stake in Portuguese engineering company Efacec, ten years after she bought 38.3% in Portugal’s Galp Energia in partnership with Portuguese businessman Américo Amorim. Isabel dos Santos, whose fortune was estimated at $3bn last year by Forbes magazine, established the 50/50 Winterfell joint venture with the recently created Empresa Nacional de Distribuição de Electricidade (ENDE) in order to purchase foreign assets. Isabel dos Santos and Winterfell bought a 65% stake in Efacec Power Solutions at the beginning of June from two Portuguese companies, Grupo José de Mello SGPS and Têxtil Manuel Gonçalves.

Angola
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France’s Veolia, the main shareholder in Société d’Énergie et d’Eau du Gabon (Seeg), has started negotiations with the government for an extension of its concession contract, which expires in 2017. Under the contract, signed in 1997, Seeg has a monopoly of power transmission and distribution and is the main player in generation.The last round of negotiations took place in Libreville on 20 May between energy and water resources minister Désiré Guedon and Seeg board chairman Patrice Fonlladosa. Seeg’s turnover rose by 6.7% in 2014, from CFAF182bn ($309.4m) to CFAF195bn, and the company reported a CFAF6.2bn profit.

Gabon
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Canada will require extractives companies listed on its stock exchanges or based in the country to disclose their payments under the Extractive Sector Transparency Measures Act, which came into force on 1 June. The act was passed into law on 16 December 2014 and, after 1 June, all extractives companies subject to the act will be required to report payments including taxes, royalties, fees and production entitlements of $100,000 or more to all levels of government in Canada and abroad.

Issue 302 - 12 June 2015

Egypt: Bold sector reforms planned

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President Abdel Fattah El-Sisi is reviewing a new electricity law which, if approved in its present form, will introduce further substantial reforms to the sector. Sector experts consulted by African Energy did not expect him to pass the law until after the summer peak demand period, as officials are unlikely to have the capacity to deal with the proposed changes before then. Among the main reforms envisaged by the law are the unbundling of grid operator Egyptian Electricity Transmission Company (EETC) from its parent company Egyptian Electricity Holding Company, and making regulator EgyptERA responsible for setting electricity tariffs.

Egypt
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The US Department of Justice (DoJ) has closed its investigation into Hyperdynamics Corporation concerning possible violations of the Foreign Corrupt Practices Act. “Based upon the information known to the department at this time we have closed our inquiry into this matter. If we obtain additional information or evidence in the future regarding this matter, we may reopen our inquiry,” the DoJ said in a letter to the company’s lawyers. The DoJ issued a subpoena in September 2013 asking Hyperdynamics to produce documents relating to its activities in Guinea.

Guinea
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Malawi is completing the sign-up steps to become an Extractive Industries Transparency Initiative (EITI) candidate and is expected to present an application to the EITI Board by 30 June. The EITI is part of the government’s commitment to develop the oil and mining sector in a manner that generates revenue to the state and benefits the citizens of Malawi.In a state of the nation speech to parliament on 5 May, President Peter Mutharika said: “In view of the commitment by government to enhance transparency in the mining sector, government will join the EITI to promote revenue transparency.

Malawi
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A British man has been jailed for two-and-a-half years for his role in supplying confidential information in relation to oil and gas engineering projects in Egypt, Russia and Singapore. Graham Marchment, 57, pleaded guilty at Southwark Crown Court to three counts of conspiracy to corrupt. His four co-conspirators were convicted in 2012, but Marchment fled to the Philippines, only returning in December 2014 when his passport expired and he was unable to renew it because of the outstanding arrest warrant.

Free

French consultancy Sofreco has a new technical assistance contract to support the energy agency of the three-nation Great Lakes Economic Community (CEPGL), Energie des Grands Lacs. The 2015-16 contract is intended to build institutional, technical, human and other capacity; update the Regional Energy Master Plan; harmonise norms and standards, and environmental assessment practices; adopt funding, implementation and monitoring procedures for studies and projects; and consolidate the information and communication system.

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Energy minister Davis Chirchir has stepped down while anti-corruption officials investigate allegations against him. The self-imposed suspension followed a 26 March speech by President Uhuru Kenyatta, who asked officials named in an Ethics and Anti-Corruption Commission (EACC) probe to step down. On 9 April, Chirchir was questioned by the EACC. He has denied any wrongdoing. The EACC alleges that Chirchir used his influence to push for China’s Sinopec to be awarded a Sh43bn ($462m) contract by the Kenya Pipeline Company last year ahead of Lebanese company Zakheem International.

Kenya
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With Goodluck Jonathan’s presidency marked by a lack of improvement to power supply, a push from the top is needed to clear blockages that have held up progress. Generation on 31 March stood at only 3,540MW, according to the Federal Ministry of Power. With peak demand recorded at 12,800MW, the sector suffered a shortfall of some 9,260MW.The declaration of the Transitional Electricity Market (TEM) in February was seen as key to unblocking the sector. However, industry sources doubt whether the TEM is being fully implemented.

Nigeria
Issue 297 - 27 March 2015

Algeria: Sonatrach trial opens

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The long-awaited trial of senior officials implicated in three alleged corruption scandals involving state energy giant Sonatrach opened on 15 March, but ground to a halt the same day. The defence withdrew from proceedings following wrangling over procedures, inefficiencies (such as the Italian translator failing to show), protests that only 22 of the 60 witnesses requested had been called to the court, and concerns over the long detention of a number of prominent defendants. Even before the latest postponement, a generally sceptical press argued that key witnesses were missing, headed by former energy and mines minister Chakib Khelil, who is living in the US (where he holds a green card but not a passport).

Algeria
Issue 297 - 27 March 2015

Afren calls in Serious Fraud Office

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Afren says it has passed information to the UK’s Serious Fraud Office (SFO) after an investigation uncovered new concerns over expenses payments. In a statement released late on Friday 20 March, Afren said reporting the concerns was a condition for the provision of interim funding from bondholders to keep the indebted company afloat. The concerns arise from an investigation by Willkie, Farr & Gallagher (WFG) regarding the hire of an individual in 2012, and the payment of travel and accommodation expenses connected to Afren’s activities, the company said.