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Treasury faces fresh K2.7bn claim

  • Msowoya says case to be verified, audited

Treasury is facing a fresh K2.7 billion ($4.9 million) claim in outstanding bill for services road consultants Abuljebain Engineering Consultants (Aeco)/United Engineering and Technical Consultants (Unetec) rendered in 2010.

Msowoya: Once audited and verified, they will be considered
Msowoya: Once audited and verified, they will be considered

Documents seen by The Nation show that the consultants were hired to undertake works on three road projects: Zomba-Jali-Phalombe-Chitakale Road, Thyolo-Makwasa-Thekerani-Muona-Bangula Road and Liwonde-Naminga Road.

However, government terminated the consultants’ contract after alleged differences with the contractor, MA Kharafi& Sons.

In an interview on Wednesday last week, Minister of Transport and Public Works Francis Kasaila confirmed the developments, saying government and financiers unanimously agreed to terminate the contract due to disagreements that were affecting progress of the roads.

Said the minister: “We had a meeting some time back where MA Kharafi& Sons told the meeting that they cannot work with the consultant. This was done in the presence of our donor partners, hence the decision was made to terminate the consultants’ works.

Kasaila: We had a meeting some time back
Kasaila: We had a meeting some time back

“After this [termination], that was when the consultant billed us a very large amount to which government needed a clarification as to how the debt had arrived at K3 billion ($5.4 million). There were some disagreements, but a settlement has been reached and government will honour its part.”

In a letter dated March 20 2015, Roads Fund Administration (RFA) chief executive officer engineer Trevor Hiwa told the principal secretary in the Ministry of Transport and Public Works that government had written the  consultants informing them that outstanding payments for the three roads stood at K478 million ($865 942).

In its letter, RFA said the consultant was rejecting the amount because it was less than what he was entitled to.

Secretary to the Treasury Ronald Mangani then wrote Attorney General KalekeniKaphale to provide a way forward.

Kaphale, in a response dated July 14 2015, said: “The letter from Roads Authority dated 20th March 2015 written to the Roads Fund Administration and copied to the consultant/claimant clearly contains an admission of liability.

“The situation is compounded by the fact that the said letter was copied to the claimant who can use it in court or before an arbitrator to justify his claim. On the basis of an admission, I believe it will be difficult to deny liability to pay.”

Treasury spokesperson Nations Msowoya said all government arrears are subjected to verification and audit by the National Audit Office (NAO).

He said: “Once verified and audited, they [claims] are considered for payment.”

Government owes contractors and suppliers in excess of K170 billion in arrears.

In the 2015/16 National Budget, Treasury has made a commitment to settle about K50 billion in zero coupon promissory notes for contracts verified and audited by NAO.

However, the piecemeal settlement of arrears has given little joy to contractors, especially small and medium-scale ones, whose operating capital and cash flow have been strained, forcing some of them to borrow funds at higher rates from commercial banks.

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One Comment

  1. I don’t know the contents of what was communicated between RFA and the consultant but I believe admission to liability does not in any way imply acceptance to pay claimed amount. This is the issue the AG should have addressed. I guess we do not have specialists in construction contracts and arbitration within the AG’s office otherwise as a tax payer I expect the government to protect and use prudently my money!!

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