Old Mutual Investment Group and M & M Consortium have been identified as successful bidders to construct accommodation units in public universities for students.
The two firms have entered into a Public Private Partnership (PPP) with the government through the Public Private Partnership Commission (PPPC).
Addressing the media in Blantyre on Tuesday, PPPC Chief Executive Officer, Jimmy Lipunga, said the contract agreement is for 35 years.
Lipunga explained that previously, the agreement was for 25 years but had to be stretched as a way of making sure that the rental rates are not prohibitive.
“PPPC believes that the longer the contract period the lower the rentals. Initially, we were looking at 25 years but when we did the financial modelling, it was showing much higher cost on rentals and this has been stretched to 35 years as agreed by the investors.
“The rentals will ultimately be as low as possible. Any investor would want to cover their risks as much as possible and we have only allowed that to the extent that we believe it is inevitable for them to incur such costs,” Lipunga said.
He said whatever costs that are going to be accommodated in this project will be the necessary costs for facilitating accommodation facilities.
“As PPPC, we have also encouraged the government to do everything in its powers to influence pricing of these facilities. We offered a few options that would include for example, waiving duty on materials of these facilities and availing of grants from donors to make sure that the cost of investment is lowered.
“We have also engaged the grants and loans board within the ministry of education to include widening the scope of its assistance to students. The focus has been on tuition and we are saying now there is this other aspect of accommodation that needs to be taken care of,” he said.
Lipunga said the government is now keen to improving access to university education since there are a lot of eligible students, who cannot enter universities because of lack of bed space.
He said the government through the ministry of education and the public universities decided to take advantage of the PPP framework to involve private sector to develop these facilities in order to solve the accommodation problems.
“We have now finalised all the negotiations and the contracts have been drafted and are being reviewed by the Ministry of Justice and what remains is clearance to be sought from the minister of education and relevant stakeholders to sign the agreements upon which the two firms will now implement the projects,” Lipunga said.
The project will benefit the following public universities, University of Malawi, Lilongwe University of Agriculture and Natural Resources, Mzuzu University and the Malawi University of Science and Technology