Minister of Finance, Economic Planning and Development Goodall Gondwe says the K400 billion Lilongwe-Salima Water Supply Project contractor is negotiating with a new financier.
The minister told Parliament in Lilongwe on Thursday that negotiations on the scope of the project and financing were under way.
He said once the negotiations are finalised, the country would be informed when the project will commence.
Gondwe said Cabinet already approved that the loan Lilongwe Water Board (LWB), the client in the project, obtains through Khato Civils would be guaranteed. Thus, he said there would be no need for a Loan Authorisation Bill in Parliament.
Said the minister: “We have asked the contractors to look for some more resources and they are having discussions with them one to one today in South Africa.
“As soon as they decide that this is a credible source of financing, we will come in and look at it ourselves. Some of the projects may have to be subcontracted and they are discussing with people who could do that.”
Gondwe added that government would agree with LWB on the amount to be borrowed with Treasury guarantee.
He said: “We have passed through a number of stages for financing this project. Two aspects have been completed and the government will come in and do the finalising.”
Khato Civils (Malawi) spokesperson Taonga Botolo confirmed that the contractor met with a potential financier last week, but said details were not immediately available.
LWB and the contractor Khato Civil had signed the financing agreement with Trissag Espanola of South Africa, but Gondwe is on record as having told our sister newspaper, Nation on Sunday, that some of the terms in the contract were not concessionary.
A few weeks ago, Khato Civils alleged that some individuals were throwing spanners into the works of the project, warning that the contractor would not be above seeking legal redress to force government to pay for a job not done if the project does not take off.
The Salima-Lilongwe Water Supply Project, which seeks to pump water from Lake Malawi to Lilongwe and surrounding districts to ease water supply challenges, has been rocked by a series of controversies, including how the contractor was identified.
After a long court battle which went up to the Malawi Supreme Court of Appeal, the project is yet to start.
In its manifesto launched on March 9 this year in Lilongwe, opposition Malawi Congress Party (MCP) pledged to complete the project because in the long-term it will ensure steady water supply to the growing population of Lilongwe City.
However, civil engineer Newton Kambala has argued that the water project is a massive project requiring comprehensive investments in the energy sector.
The Salima-Lilongwe Water Supply Project also faced resistance from environmentalists who demanded that the project should have an environmental impact assessment study before it takes off.