The World Bank has expressed concern over transparency in the multimillion dollar Salima-Lilongwe Water Project.
The project seeks to draw and treat water from Lake Malawi in Salima and transport the treated water to Lilongwe.
The World Bank, in its 17th Malawi Economic Monitor (Mem) which it released on Wednesday, says, towards the end of the parliamentary meeting ending in April 2023, the government submitted to Parliament a bill to authorise National Bank of Malawi and NBS Bank to source private resources of K105 billion which would be injected into the project as equity for the government.
But according to the Mem, information on the conditions for the loan were not provided to Parliament for vetting, nor was the loan included in the budget for the 2023-24 financial year.
“This understates the fiscal deficit and domestic borrowing for the fiscal year,” the bank says.
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According to the Bretton Woods institution, in line with other large-scale investment projects, it would be important to conduct a cost-benefit analysis to ensure that the project is cost-effective, especially given the high-cost nature of domestic debt and the consequent debt vulnerabilities that would result from this.
“Moreover, this project is energy-intensive considering the amount of energy required to pump water from Salima to Lilongwe, which is 600 meters above the lake. This will crowd out already limited energy supply to other productive sectors.
“Further, to ensure that there is transparency and accountability in implementation of the project, the government should submit relevant information, including on project financing, to Parliament,” the bank says.
In the 2023-24 budget, the government allocated K500 million to the secretariat of Special Purpose Vehicle for the project. The money was allocated to facilitate financing agreements, preparatory works and documentation, among other things.
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Finance Minister Sosten Gwengwe told The Daily Times that the Office of the President and Cabinet is handling the matter.
Meanwhile, Centre for Social Accountability and Transparency Executive Director Willy Kambwandira has said concerns raised by the World Bank are genuine.
“We also raised similar concerns. Unfortunately, some people are taking advantage of the importance of the project to abuse public resources.
“Parliament must rise up and monitor the financing of this project,” Kambwandira said.
The scope of the contract is for the extraction of water from Lake Malawi to the city of Lilongwe, surrounding areas and town centres along the M14 Lilongwe-Salima Road.
The project involves abstraction and treatment of 100,000m3/day water from Lake Malawi in Salima and transportation of treated water through a 120km transmission pipeline.
The project objective is to increase water availability for Lilongwe City and strengthen capacity of LWB and surrounding towns to respond to adverse climatic conditions, hence sustain reliable water supply to its customers.
The project was initiated in 2015 but implementation was delayed due to challenges in accessing private sector funding.
