Another ‘cash-gate’ at Escom as K150m bids are rejected for K650m for building demolition

April 25, 2019 Owen Khamula -Nyasa Times 43 Comments

State-owned power utility Electricity Supply Corporation of Malawi (Escom) has come under intense criticism for rejecting a winning bid of less than K150 million for the demolition of Escom headquarters building in Blantyre which was gutted by fire two years ago and opted for a K650 million for the same exercise.

Escom advertisement

The advertisement in the local newspapers says: “Electricity Supply Corporation of Malawi Limited (Escom) wishes to inform the general public that it intends to award a contract in line with section 48 of the public procurement and disposal Assets Act no, 27 of 2017 for the demolition of burnt Escom House.”

The advertisement says the successful bidder is Irrigwater and Mining Equipment with a total price of K650 million.

The tender was initially won by Terrastone Limited whose bid was at K137, 513, 593.63 while Shire Construction Limited came second with a bid of K128, 155, 680, 00.

However, the evaluators opted for Irrigwater and Mining Equipment, unknown company that only has a Facebook page with no details about who they are.

But Escom spokesperson Innocent Chitosi justified the K675 million price for the demolition of the building, saying the company which will demolish the building will need expensive equipment.
“The building is situated in the middle of the town. It is surrounded by other business entities. We would not want other business entities to close or the Highway to close just because we are demolishing the building,” said Chitosi.
He said the transportation cost of the heavy equipment justifies the K675 million cost.
However, some people say K675 million is a cost of construction a new building.
Writing on his Facebook page, academic and analyst Henry Chingaipe observed that the contracted amount was on the higher side for the exercise.
Escom—already mired in financial liabilities in excess of over K80 billion with local and foreign institutions—has been attributing the loss of billions to the unbundling of the parastatal to form Electricity Generation Company (Egenco) in 2017 as an independent power producer. The unbundling meant that Escom entered into a power purchasing agreement with Egenco at tariffs which the Malawi Energy Regulatory Authority (Mera)  approved.
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