The Ministry of Finance says the K260 billion Salima-Lilongwe water project could be back on track following Khato Civil’s identification
of a financier who meets government’s criteria.
Briefing the Parliamentary Committee on Natural Resources and Climate Change in Lilongwe yesterday, Ministry of Finance representative Nations Msowoya said financing was a major challenge for the project to begin.
He said: “The latest position of this project since the parliamentary communication; the major thing that has been delaying the project was financing of the project, which now has been resolved.”
Msowoya, who could not disclose the name of the financier, said Treasury has since endorsed the creditor.
He said the conditions for the loan meet government requirements; hence, they have started engaging the financier.
Msowoya disclosed that government will continue engaging the financier and when the process is done the matter will be brought to Parliament.
“When borrowing externally we have certain guidelines that have to be followed. We look at a number of aspects such as how the money will flow to Malawi, which bank we are going to use, type of banks we use, currency, rates. So many things go into these financial negotiations, actually it is a complex topic.
“On the technical side, our engineers, economists, accountants look at the technical side of the project, which looks at setting of the pipes; where they will place treatment tanks and issues of compensation. So, those are some of the things that would happen under the financial negotiation,” he said.
Msowoya added t h a t government will also negotiate with the contractor on the value of the contract so that it is lowered on the consideration that different materials will be used.
Khato Civils chief executive officer Mongezi Mnyani confirmed identifying the financier,
adding that there have been several engagements between government, the financiers and Khato Civils regarding the loan.
“We are now in the stage of securing funding and that is not our area of expertise. The Ministry of Finance came in and, therefore, started running the process.
“The contract that is there and valid is between Khato Civils, South Zambezi joint venture and Lilongwe Water Board. But what the Ministry of Finance is doing is to ensure that the funding we have secured is in line with the Malawi Government, meets requirements of how finances are to be secured from outsiders; are the terms and conditions okay? Are they complying with various jurisdictions and so forth?” he said.
Mnyani added that Khato Civils is ready to work on the project and is just waiting for government and the financier to finalise the loan agreement and have the funds start flowing.
He said as soon as funds start coming, the company will mobilise equipment to start.
Parliamentary Committee on Natural Resources and Climate Change chairperson Welani Chilenga said the identification of a financier is good news to Lilongwe residents and surrounding areas.
“As a committee, we are very excited. We can at least see light at the end of the tunnel on the Salima-Lilongwe water project. This project is very important and it is a project we hope will be sustainable,” he said.
Chilenga said members of Parliament will now be waiting for a Loan Authorisation Bill to be tabled in the House to fund the project.
On some development partners’ concerns on the project’s financing, Chilenga said Malawi is a sovereign country and cannot be dictated on what to do.
He said the people of Lilongwe need sustainable solutions to water problems.
Parliament earl i e r recommended that the project should proceed, saying it was viable and that the dam supplying water to Lilongwe City and sorrounding areas was facing challenges due to destruction of Dzalanyama Forest Reserve