By Cathy Maulidi:
A fertiliser deal between the Malawi Government and Namibia-based company Nendongo Commercial Group has gone sour, with government now dumping the company, citing failed financing arrangements as one of the grounds.
A document, which The Daily Times has seen, indicates that Malawi signed a deal with a company that deals in fish and oil products.
In September 2022, Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM) entered into the deal on behalf of the Malawi Government, giving the Namibian firm the green light to supply 200,000 metric tonnes of fertiliser to Malawi.
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“The contract was for the company to supply 200,000 metric tonnes of fertiliser comprising 100,000 metric tonnes [of] NPK and 100,000 metric tonnes [of] Urea. The prices were $850 per tonne for NPK and $650 per tonne for Urea. The contract is now a dead transaction,” the document from the Ministry of Agriculture reads.
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The declaration also comes days after revelations that the government had entered into a deal with the company which does not deal in fertiliser business.
But, according to the document we have seen, Nendongo— through a company that was supposed to get funds for the contract, namely Auzano Capital Management—could not source funds for the contract despite having a government guarantee.
“Auzano Capital Management Limited were mandated to arrange financing and payment instruments to finance the supply. A government guarantee was issued in favour of Auzano to support [the] arrangement of financing and Auzano failed to arrange the financing within the contracted time,” the document reads.
But Nendongo Commercial Group, through its chief executive officer Jonas Nendongo, has dismissed the government’s claims.
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He indicates, in a document we have seen, that the company is suing the Malawi Government.
In the document, the company claims that it feels shortchanged by the Malawi Government, such that it wants the government to pay for loss of profits.
The document, signed by Nendongo’s lawyer Chancy Gondwe, states that the company already shipped 4,000 metric tonnes through Beira, Mozambique, and that, therefore, the government should pay for loss of profits.
“According to the Special Conditions, the defendant (SFFRFM) was obliged to provide a Letter of Credit valid for 180 days and a firm called Auzano Capital Management, by letter dated 15th October 2022, wrote the claimant (Nendongo) that they were charged with providing a financial instrument for the defendant’s contract holders and that the said instruments shall be made available from 28th October 2022.
“However, contrary to the Special Conditions, the defendant did not make available the Letters of Credit. Due to the SFFRFM’s breach, by failing to provide Letters of Credit, Nendongo could not proceed to make ready for shipping of the remaining 196, 000 metric tonnes,” Gondwe’s document reads.
Nendongo claims that he had already paid for the artwork for the said fertiliser and shipped it to Beira, Mozambique, further claiming that he lost revenue in respect of the 4,000 metric tonnes delivered in Beira, Mozambique, which translates to $3,400,000 (approximately K3.5 billion).
And, in an interview, Gondwe confirmed getting instructions to pursue the matter.
“We, indeed, have instructions from Messrs Nendongo but we are currently weighing the possible legal options available on behalf of our client,” Gondwe said.
On the amount being claimed, Gondwe declined to divulge more information to preserve the lawyer-client relationship.
Meanwhile, Agriculture Committee of Parliament Chairperson Sameer Suleman has blamed the government for what he described as carelessness in handling deals.
“I always say this; these deals are signed carelessly and, if not careful, Malawians will continue to lose taxes through such type of issues. We are summoning Ministry of Agriculture officials on Friday; they should also respond to this,” Suleman said.
