No loan deal yet for Salima—Lilongwe Water Project

MABABA— We are ready

By Wezzie Gausi:

Contractor for the Salima—Lilongwe water project, Khato Civils, has disclosed that financiers for the works are still preparing the loan agreement which will then be submitted for the Malawi Government for consideration.

Further negotiations among the concerned parties are expected to take off after the submission.


Through the project, whose initial contract price of $500 million was reduced to $315 million, water will be extracted from Lake Malawi in Salima to the capital city.

Khato Civils Communications Specialist, Daniel Mababa, said lawyers for the financiers and authorities in Malawi are still engaging each other to finalise the agreement that he said should be submitted soon.

“You may wish to know that it is such a rigorous process as it must be compliant with all relevant legal provisions in Malawi and also the financiers.


“For us as a contractor, we are ready to deliver the project and get the people of Lilongwe the much needed water,” Mababa said.

Recently, government came under heavy criticism after appointing Quay Energy as the finance company for the project.

However, the Ministry of Finance backed the choice, saying although the company is new on the market, having been established in 2021, it has not had any negative feedback on its directors and affiliates and that it was identified after due diligence.

According to the government, the company offered a grace period of six years, interest rate of 1.5 percent and a one-off payment for structuring fees of 2.5 percent.

Government further indicated that the terms translate into a calculated grant element of at least 40 percent, which is above the required minimum of 35 percent for loan concessionality.

The scope of the contract is for the extraction of water from Lake Malawi to Lilongwe, surrounding areas and town centres along the Lilongwe- Salima Road.

It required the contractor to identify a financier of the project while the government’s obligation is to issue a sovereign guarantee for the loan.

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