cant raise finance,
..compensation a non starter
Khato Civils has failed to raise financing for the Salima Lilongwe Water project that continued discussions with the company are in breach of the contract it signed and procurement rules, a public procurement expert has said.
The Salima Lilongwe Water project had been subject of tussle between the contractor, Lilongwe Water Board, Government and the World Bank with the details murked by allegations of corruption, fake financiers and political meddling.
The expert said the project main condition was that the contractor was supposed to have raised the financing of the project. In April 2022, Finance Minister Sosten Gwengwe announced in parliament that a financier Quay Limited had been identified. Ministry of Finance officials said the company failed due diligence and could not raise the required USD315 million.
Secretary to the Treasury Dr McDonald Mafuta Mwale confirmed to The Investigator that new financing options had been submitted to Cabinet including foreign and domestic debt and equity through a new water supply company.
Some official sources says government is talking to insurance and property conglomerate NICO group for possible financing.
“If there is a new arrangement it means Khato has failed on the initial agreement to raise finance. The contract should be terminated on that basis and readvertised to allow all others to re-bid. Khato cant be the same to build the pipeline without a new contract,” said the procurement expert.
Khato claimed in 2018 it has spent USD43.2 million on the project and wanted USD74 million from Government when it looked like the project would be dumped.
“They failed to raise finance, why should Malawians pay them?” questioned the expert.
Mafuta Mwale said government would validate any claims before making any payment and deduct whatever was already paid. The decision on new model of financing the project has been submitted to Cabinet, he said.
Khato Civils communications specialist Daniel Mababa said the public should wait to hear from the Ministry of Finance on the project.
Khato Civils was cleared of any corruption in the deal in 2018 by the Anti-Corruption Bureau and parried away accusations that it was using political influence to bulldoze the contract.
Simbi Phiri, chairman of Khato Civils is a close friend of President Lazarus Chakwera and of late has been meeting him and the Vice President Saulos Chilima. He has publicly confirmed funding both MCP and DPP.
