Khato Civils has settled for arbitration to resolve disagreements between the company and Lilongwe Water Board (LWB) over a botched K400 billion Salima-Lilongwe Water Supply Project and is demanding K58.6 billion in compensation.
The company has proposed that Supreme Court of Appeal judge, Frank Kapanda and two private-practice lawyers Bernard Ndau and Zolomphi Khowani should be the arbitrators.
In a telephone interview Tuesday, Ndau confirmed to have been approached to be part of the arbitrators and said he was only waiting to receive a formal letter of appointment.
Khato Civils is at loggerheads with LWB after the latter terminated its contract with the South Africa-based Malawian-owned company on grounds that the contractor failed to identify a financier of the project.
In a letter to LWB, Khatho Civils’ lawyer Chancy Gondwe of Gondwe & Attorneys informed the board that the company was referring the matter to the arbitrators.
“We are referring the matter to arbitration after proposals for amicable settlement have failed in accordance with sub-clause 50.3 of the Agreement… We are proposing/nominating the following names as possible arbitrators: Hon Justice F. Kapanda, Bernard Ndau and Dr Zolomphi Nkowani,” the letter reads in part.
Gondwe said the only way the matter would be resolved was through arbitration.
“The allegation that Khato Civils has failed to find a financier is untrue and baseless. Khato Civils has been engaging various financing institutions in order to secure funding for the Lake Malawi Water Supply Project as required in terms of our contract with Lilongwe Water Board,” Gondwe said.
He added that there were numerous correspondences to the Minister of Finance and LWB in the past eight months that got no response.
Gondwe accused LWB acting Chief Executive Officer Moses Mwenye of making what he described as an incorrect statement that the company had failed to find a financier when “he is well aware that his office failed to respond and deal with two sets of proposals that had been furnished to his office regarding the funding of the project”.
In the arbitration proposal that we have seen, Khato Civils is demanding a compensation of K48.3 billion and accumulated interest of K2.5 billion.
The company is also demanding K7.3 billion for breach of contract and K 553 million for costs for demobilisation of project equipment. All this brings the whole amount to K58.6 billion.
Ministry of Finance spokesperson Willams Banda said Treasury respects contact and dialogue in matters of this nature, confirming that the matter was going for arbitration.