- Khato failing to get financier for LL-Salima water project
Contractor of the K400 billion Lilongwe-Salima Water Supply Project, Khato Civils, is yet to find a new financier for the project, months after government rejected terms of the previous one.
The development comes amid fears that Lilongwe may face water supply challenges as the current capacity of Lilongwe Water Board (LWB) was designed to satisfy demand for a 2015 population, which will likely double by 2030.
In March this year, former minister of Finance, Economic Planning and Development Goodall Gondwe told Parliament that negotiations on the scope of the project and financing were underway.
But in an interview on Sunday, the ministry’s spokesperson Davie Sado said a new financier for the project is yet to be identified.
“We are still negotiating. It’s a process which we are yet to complete. Once the discussions are over with Khato Civils, they will be able to resume work but at the moment we cannot say when that will be,” he said.
Khato Civils (Malawi) spokesperson Taonga Botolo referred questions on the matter to LWB, whose chief executive officer Alfonso Chikuni said in an interview the board was still waiting for government to resolve the matter with the contractor.
“Government is better-positioned to respond to that as it is its responsibility to mobilise funds,” he said.
While assuring the public that the utility company, apart from the Lilongwe-Salima project, has other investment projects to improve water supply, Chikuni admitted that the current demand for water will double by 2030; hence, the need for urgency on various projects.
“LWB currently meets [about] 85 percent of the population with connections and the rest using communal water points. The current installed production capacity was meant for 2015 population. To meet future demand and current deficit, the board has prepared a number of projects,” he said.
Chikuni said the projects include raising of Kamuzu Dam 1 which is in progress, construction of Treatment Works 3 which LWB, through government, is currently engaging donors on as well as the Diamphwe Dam and Lake Malawi Water projects which will guarantee steady water in the future.
He said: “The Lake Malawi Water Project responds well to concerns on climate change and resilience preparation and water quality degradation in the Lilongwe River model. Guaranteed back-up in lean times and probably the only lasting solution to water planning in Lilongwe and other districts in its corridor.
“Feasibility studies were concluded in 2017. Government and the EPC contractor have been engaging to identify financing on government acceptable terms.”
Gondwe, who is now President Peter Mutharika’s special adviser on finance and development, had previously said Cabinet already approved that the loan LWB, obtains through Khato Civils, would be guaranteed. Thus, he said there would be no need for a Loan Authorisation Bill in Parliament.
Said Gondwe then: “We have asked the contractors to look for some more resources and they are having discussions with them one-to-one 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.”
The former Finance minister added that government would agree with LWB on the amount to be borrowed with a 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.”
LWB and the contractor, Khato Civils, 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.
Khato Civils is on record as having claimed 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.
The project also faced resistance from environmentalists who demanded that it should have an environmental impact assessment study before it takes off.