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Government meets over Salima-Lilongwe water project

Malawi News investigations have revealed that stakeholders from government’s side are expected to meet Monday, September 23 2019 to map the way forward on Salima-Lilongwe Waterway Project.

Last week, we exposed how government is no longer interested in the project, which was initially designed to ease water problems in Lilongwe City and surrounding areas despite signing the project worth $400 million (about K300 billion).

According to our source who opted for anonymity, President Peter Mutharika tasked the stakeholders to hold a roundtable and discuss the matter.

“The President called Minister of Agriculture and Water Development Kondwani Nankhumwa to get more details on the matter. It seems he [Mutharika] was in the dark, so he ordered the minister to convene a meeting of all stakeholders on the matter. And the meeting is slated for Monday September 23 2019,” said the source.

However, Presidential Press Secretary Mgeme Kalilani could neither confirm nor deny saying he could not get hold of the President on the matter as they were about to take off for Zimbabwe where Mutharika has joined other international leaders in attending former Zimbabwe leader Robert Mugabe’s funeral in Harare tomorrow.

“I am currently on a plane and the President is the only one who can give confirmation on the matter you are inquiring,” he said.

Efforts to speak to Chancy Gondwe of Gondwe and Attorneys, lawyer representing Khato Civils, contractors of the project, proved futile as he could not pick up his mobile phone.

Government’s lack of interest comes at a time when Lilongwe City has been experiencing water problems.

This lack of interest has resulted in a mess as evidenced by frustrations raised by the contractor who, upon seeing the delay and lack of action on the part government, is now seeking compensation at a cost of $71.2 million (approximately K57 billion at current exchange rate).

Writing to Lilongwe Water Board (LWB) chief executive officer, the lawyers representing Khato Civils, claim, since the appointment date, Khato Civils had so far spent $71.2 million on the required processes precedent to start of the project.

Apart from asking for compensation for expenditure incurred in the expectation of completing the whole works, Khato Civils is demanding payment on all certificates that are due, interest on the sums due and owing at the bank lending rate and damages for breach of the contract.

During our investigations, we found out that at the start of the project, government tasked Khato Civils to identify funders of the project whose loan would be paid back within a maximum of 30 years.

In this regard, Khato Civils managed to secure funders of the project – Grissag AG Ltd – who were going to provide $400 million on a long-term basis.

Our investigations showed that government, through then secretary to Treasury Ben Botolo, signed the loan agreement with Grissag AG Limited on September 26 2018 for the project.

We also found out that a meeting held on April 12 2018 at the then minister of Finance’s office Goodall Gondwe, Khato Civils presented an invoice for the Engineering, Procurement and Construction works the Contractor had carried out at $40 million (K30 billion) which government was supposed to settle.

According to Gondwe, the $40 million was used for mobilisation to site of various equipment and personnel, aerial and geotechnical surveys, preparation of feasibility and study and preparation of concept design and detailed designs and drawings.

From the said amount, Khato Civils was asking for an upfront payment of $25 million but government negotiated to $17 million due to lack of resources.

Following the recommendations, our investigations showed that LWB obtained the loan money from National Bank of Malawi.

Our investigation found out that LWB is struggling to pay back the money after government’s actions to freeze the project and fulfilling its promise to pay back the money through Sovereign Guarantee it provided the board.

The Salima-Lilongwe Water Supply Project, which seeks to pump water from Lake Malawi to Lilongwe and surrounding districts to ease water supply challenges, has been rocked by a series of controversies, including how the contractor was identified and amount of money required for the project with some Malawians arguing it was too high.

After a long court battle which went up to the Malawi Supreme Court of Appeal, the project is yet to start.

In its manifesto launched on March 9 this year in Lilongwe, opposition Malawi Congress Party pledged to complete the project because, in the long term, it will ensure steady water supply to the growing population of Lilongwe City.

However, civil engineer Newton Kambala has argued that the water project is a massive project requiring comprehensive investments in the energy sector.

The project also faced resistance from environmentalists who demanded that the project should have an environmental impact assessment study before it takes off.

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