State-owned Plant and Vehicle Hiring and Engineering Services (PVHES), which was reformed to be commercially-viable five years ago, is now on its knees seeking a K2.5 billion government bail-out to streamline operations.
A Nation on Sunday investigation has shown that the organisation’s financial woes are partly a result of debts amounting to K400 million, which ministries, departments and agencies (MDAs) are failing to honour.
And more than half of the organisation’s machines and plants are also grounded and operations at its offices across the country are paralysed.
A former senior PVHES official, who asked not to be named, disclosed that the culture of MDAs failing to honour PVHES bills dates back to eight years, adding that the operational malaise at the institution is compounded by political interference and corruption.
“They [unnamed top politicians] want to kill PVHES to give an advantage to their private companies. They know if PVHES is efficient, their private businesses won’t grow; so, they would rather have it systematically crippled,” he said.
In an interview, PVHES chief executive officer Jomo Mkandawire conceded that his organisation is facing a set of miseries.
“We are talking to Treasury to help us collect the debts from MDAs. There are a number of them. We are surviving on a hand-to-mouth basis because we are not making enough money, worth counting on as 50 percent of our machinery is down.
“To get back to our feet, we need about K2.5 billion to buy new sets of equipment because most of it is old. We also need to repair some of the equipment and we need to improve our workshops across the country, and create new centres,” explained Mkandawire, who declined to name the MDAs which owe them.
But when showed a list of the supposed PVHES debtors, he expressed surprise that Nation on Sunday had seen some of the culprits.
Surprisingly, among the MDAs with huge bills is the organisation’s parent ministry of Transport and Public Works, which owes PVHES over K60 million.
According to the list, State House is another culprit, with an unpaid bill of over K44 million whereas Ndata Farm, the private home of the late president Bingu wa Mutharika, owes PVHES about K17 million.
The other debtors include the Office of the President and Cabinet (OPC), the Ministry of Lands, Housing and Urban Development and several district councils. And most of the unpaid bills are eight years old—apparently, from when the organisation started nose-diving, financially.
Our investigation revealed that politicians often pressurised the organisation to grade or repair roads or bridges for the convenience of national functions, which were usually presided over by presidents or State visitors. However, after performing the tasks, PVHES would be left unpaid for years on end.
In a telephone interview, Minister of Transport and Public Works Jappie Mhango said he is aware that PVHES is struggling finacially. But he said he did not know that there are debtors, including his ministry, that owe the institution huge bills.
On the other hand, Ministry of Lands, Housing and Urban Development spokesperson Charles Vintulla said there is no record showing such a debt.
But director general for State Residences Peter Mukhito confirming the State House debt, claimed it had long been paid off.
“I have checked with our auditors. That was sorted out by Treasury a long time ago, even before this regime came into power. So, check with Treasury,” he said.
Put to him that some MDAs are not aware of the debts, Mkandawire insisted that their records are clear and they will push for payment through Treasury.
Both Mkandawire and Mhango doubted suggestions from a well-placed source in government that government intends to privatise the entity due to the losses it incurred.
However, Mkandawire said his informed opinion is that privatisation would be costly to the government as service charges were likely to go up.
On his part, Mhango said he is optimistic that government will recapitalise PVHES.
PVHES’s fore-runner, the Plant and Vehicle Hire Organisation (PVHO), was established under the Public Finance Management Act as a Treasury fund to manage government’s fleet of plant and vehicles, and also provide technical services on a commercial basis to both government and private sectors.
As part of government reforms, the organisation was in 2013 rebranded as PVHES, incorporating expanded business opportunities to make it more commercially viable.
In the 2014 Malawi Investment Compendium, government estimated that recapitalisation of PVHES would cost about K2.5 billion ($3 400 000), an amount which has not been included in the current proposed National Budget.
According to a World Bank report of 2004, when the then PVHO was responsible for procurement and maintenance of government vehicles and equipment, there was no wastefulness of public resources due to inflated bills in private garages.