An Australian firm has received a full backing of the government of Malawi on the financing of the Salima-Lilongwe water project.
Quay Energy Corp (Aus) PTY LTD has been selected to find financiers for the K300 billion water project, the biggest water project ever taken in the country.
However, some Malawians expressed worry that the company might not have the capacity to carry out the job since it had just been registered in 2021.
But the Ministry of Finance and Economic Affairs has backed and given full support to Quay Energy Corp (Aus) Pty Ltd for financing of the Salima–Lilongwe water project saying, despite the firm being registered in 2021 it has the capacity to carry out the assignment.
In a statement, the ministry further indicates that thorough due diligence was conducted on the firm to ascertain their capability.
The statement has further clarified that Quay Energy Corp is not the financier, but an “arranger of the financing”.
Reads the statement: “Despite being established in 2021, there is no negative feedback on its directors and affiliates.
“Thorough due diligence was conducted on the arranger of the financing.
“Additionally, Quay Energy, has indicated that it would be working with reputable international financial institutions in arranging this financing hence the financing shall be syndicated.
“Thus, Quay Energy is not the financier but the arranger for the loan”.
The statement further indicates that out of the proposed loan amount (US$313,447,757.00) there is a grant of at least 40 percent.
The loan repayment period is 25 years, with a six-year grace period and it also includes an interest rate of 1.5 percent and a one-off payment for structuring fees of 2.5 percent.
“These terms translate to a calculated Grant Element (GE) of at least 40 percent which is above the required minimum GE of 35 percent for loan concessionally” further reads the statement.Follow and Subscribe Nyasa TV :