Khato clarifies $7 million Lilongwe Water Board payment

Khato Civils, a company awarded a multi billion Lilongwe-Salima water project,  has clarified that the $7million it got from the Lilongwe Water Board was part payment for the engineering services and designs, which South Zambezi did on the project.

Khato is geared to execute the much-awaited project to tap water from Salima to Lilongwe with a reduced cost by about US $102 million.

The clarification follows a spate of speculations on the social media querying the reasons for the $7million  payment.

Khato Civils chief executive officer Mongezi Mnyani, responding to a Nyasa Times questionaire on Sunday, clarified that there is nothing new, deceitful or secretive about a payment  which he said was for invoices submitted in relation to work done in respect to the Salima-Lilongwe Water project.

He said as at the time of the payment in 2018, there were cumulative invoices of US$55m for works done in respect to Geotech surveys, preparation of feasibility studies, concept designs, detailed designs, seismic surveys, engineering peer reviews and mobilization of engineering personnel and equipment.

“As of now there are balances which remain unpaid from over US$74million that Khato Civils incurred for these works. The funds which Lilongwe Water Board paid were proceeds from a bank loan that was guaranteed by the Malawi Government and paid in two tranches of US$7million remitted to our account in South Africa while the balance US$10million was paid in Kwacha in our local account in Malawi,” he clarified.

Mnyani emphasized that there is no official from the Malawi Government or Lilongwe Water Board who has benefited directly or indirectly from this “pretty straight forward transaction which is well documented in public domain through mainstream media”.

The parastatal took a $17 million loan from National Bank approval by former Finance minister Goodall Gondwe and guaranteed by Treasury to settle the Khato’s invoices.

“Government then requested LWB to honour the fee note on its behalf on the understanding that the money would be reimbursed soonest the project facility would become available,” reads part of the minutes of the meeting chaired by Gondwe, where it was agreed that Lilongwe Water Board would call for an emergency board meeting to seek necessary board approvals to borrow $17 million from commercial banks and that “Treasury would acquiesce to the loan by granting a Sovereign Guarantee (SG) accordingly and that the Attorney General (AG) would assist in the drafting of the Sovereign Guarantee as appropriate”.

Reads one of the communications from Gondwe: “Therefore I am pleased to inform you that government consent is granted allowing Lilongwe Water Board to borrow an amount not exceeding US$17,000,000 from National Bank of Malawi.”

But ever since the award of the contract, there have been numerous allegations and reservations by a number of parties, some of whom have gone to the extent of using mercenaries to fight their dirty battles for reasons best known to themselves.

Although the Environmental and Social Impact Assessment (ESIA), which was also a subject of contention by those who have no knowledge of where in a project’s life cycle it fits, was completed by a Lilongwe Water Board appointed consultancy firm Nemus of Portugal, the project has failed to take off because some people, who are apparently opposed to the project for their own personal reasons, have been fabricating stories in an attempt to delay or stop it.

The multibillion Kwacha project, once completed would address water challenges in Malawi’s capital, Lilongwe, and the surrounding districts.

The Salima-Lilongwe water project has been a subject of legal battles with the civil society taking the government to court for awarding the firm the contract before an environmental assessment was done, a matter which Khato Civils won.

In its manifesto launched on March 9, 2019,  Malawi Congress Party (MCP) pledged to complete the project because, in the long term, it will ensure steady water supply to the growing population of Lilongwe City. 

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Civil Engineer
Civil Engineer
7 months ago

I find it difficult to understand the rationale of awarding this huge project to one company. Both South Zambezi Engineering & Khato Engineering are companies owned by Simbi. What’s more is that I find it difficult to understand that the preliminary designs and detailed designs are given to the same company that is going to build the water channels that is South Zambezi and Khato respectively. Is this not conflict of interest. Was an independent company appointed to do a third party design review of the detailed designs? It seems to me somebody was in a hurry to give the… Read more »

mfumu
mfumu
7 months ago

These stories are tiring. Any serious investor, would not invest in a country that has questionable governance institutions.

You have Simbi Phiri, openly confessing to have been supporting both DPP and MCP, and lo and behold, he even bought the MCP President a car. This sounds like buying influence. How different is Simbi from Thom Mpinganjira?

Nyabanda
Nyabanda
7 months ago
Reply to  mfumu

Did Simbi bribed the Judges, Thom tried to bribe the judges to get favours of becoming the next president of mw. may be cos the motive one can not understand buy him, whom some of us looked up to him as our hero.

Mulopwana
7 months ago

Nyasa Times polishing up facts. Mukumveka

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