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World Bank against Salima-Lilongwe project

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The World Bank (WB) has warned the government against proceeding with the Lilongwe-Salima Water Project, citing severe economic downsides to the country.

This is in a leaked letter from WB Country Manager for Malawi, Eastern and Southern Africa region, Hugh Riddell, to the Ministry of Finance. It has been copied to several ministries and government departments.

However, WB officials in the country refused to comment on the letter, which reads in part: “I would like to confirm that a global World Bank team has been remobilised to work closely with the Lilongwe Water Board (LWB) and the Department of Water Resources to prepare [for] the project. As you are aware, the Diamphwe Dam and associated infrastructure is the most prominent investment under the project, in addition to a proposed comprehensive livelihood development programme.

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“We share your concerns over the urgency to address the water supply bottlenecks for Lilongwe City, which is the basis for our engagement in the Lilongwe Water Programme developed by the LWB.”

According to the letter, the programme includes a series of sequenced investments on the network, bulk water and institutional strengthening to enhance LWB’s service delivery capacity.

The programme prioritises the raising of Kamuzu Dam 1 and construction of a new dam on Diamphwe River, in addition to network upgrades to improve efficiency and reduce losses.

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The letter further states that, in accordance with prioritisation of investments listed in the Lilongwe Water Programme, the Salima- Lilongwe Water Project is not the most cost-effective way to increase water supply to Lilongwe at this time.

“Moreover, it would not [sic] be feasible nor optimal for Malawi to invest in both sources (Diamphwe and Lake Malawi) in parallel, as it would result in excess water put [ting] an extra burden on the financial systems of both the LWB and the Treasury, and risk non-compliance to the legal covenants under the existing projects that require LWB total revenues to be equivalent to not less than the sum of its total operating expenses; and debt service requirements.

“Given that Malawi is at high overall risk of public debt distress, avoiding the accumulation of non-concessional external debt or guarantees is critical to avoid worsening debt sustainability,” states the letter.

WB has been upgrading a $100 million Lilongwe Water and Sanitation Project in Lilongwe.

The Diamphwe Dam investments package was identified as the next priority intervention to complement ongoing investments and help LWB secure a water supply (150,000 cubic meters a day in total— doubling the current production capacity) for Lilongwe City up to 2045.

Khato Civils, a South African company, was appointed to implement the Salima–Lilongwe Project at K300 billion.

However, Khato Civils reduced project costs to K250 billion.

Khato Civils Chief Executive Officer Mongezi Munyani said their position on the issue was clear.

“We have a legal and binding contract with Malawi Government, through Lilongwe Water Board and it’s up to them to deal with the World Bank.

“We, as Khato Civils, cannot entertain such views as they are not directed to us but the government. I will, therefore, request that you approach the government in order to clarify their stance regarding the matter,” Mongezi said.

Two weeks ago, during a meeting with members of the Parliamentary Committee on Natural Resources, Munyani expressed dissatisfaction with how the government was handling the project.

And committee chairperson Werani Chilenga maintained that Parliament was more interested in the Salima- Lilongwe Water Project than the Diamphwe Water Project.

“Our recommendation to the government was that, due to scarcity of water in Lilongwe, the Salima- Lilongwe waterway is the best option because the Diamphwe Project would not be sustainable since we are failing to manage Dzalanyama Forest, where deforestation has reached its climax,” he said.

Chilenga feared that Malawians would end up regretting and going back to the Salima-Lilongwe Water Project.

Treasury spokesperson Williams Banda refused to comment on the WB letter, saying he had not yet seen the communication.

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