Khato issues rebuttal on LWB claims: ‘Malawi govt frustrating Lilongwe water project’

Khato Civils, a South African-based firm owned by a Malawian business magnet Simbi Phiri,  has dismissed claims by  Lilongwe Water Board (LWB)  that is has failed to find a financier the K400 billion Salima-Lilongwe water supply project, saying LWB acting chief executive officer (CEO) Moses Mwenye is being used by political gurus to “scandalise” the company.

Mwenye said LWB has written Attorney General (AG) Kalekeni Kaphale, seeking his second opinion on the board’s decision to terminate the contract signed in 2016 which, if done, is expected to provide water to the city of Lilongwe via a 120- kilometre pipeline from Lake Malawi.

But in a statement made available to Nyasa Times, Khato Civils CEO, Mongezi Mnyani, said LWB allegations that the firm has failed to find a financier is “untrue an baseless.”

He said Khato identified financier which he did not name but Minister of Finance and Economic Planning Joseph Mwanamvekha and LWB CEO have ignored “numerous correspondence” from the firm for the past eight month.

According to a letter dated August 2019, addressed to Minister of Finance and LWB, Khato Civils is introducing Atrafin, an American trade and finance company, which offered LWB a credit facility.

The loan guarantee was provided by the Export and Import Bank (ExIm Bank) expected to notify ExIm Bank that the transaction was of the highest priority and would conform with IMF and World Bank programme limits on non-concessional debt.

Mnyani said LWB has failed to respond to and discuss funding proposals for financing the project.

“It is therefore  surprising and shocking for the acting CEO of Lilongwe Water Board to make such an incorrect statement and yet he us well aware that his office dismally failed to respond and deal with two sets of proposals that had been  furnished to his office regarding the funding of the project,” reads Khato’s statement.

Khato says LWB acting CEO is either a “liar” or “incompetent” or he is “deliberately being economical with the truth and facts of this matter.”

The statement said Mwenye could be one of the individuals “who for reasons best known to himself has ulterior motives to scandalise and bring Khato Civils into disrepute.”

Khato Civil states the LWB acting boss is “highly compromised” and is being used by “political handlers” who wish to portray a misleading image to the public to give the impressions that the Lilongwe-Salima water supply project contract has been frustrated by non-performance of the contractor.

It said the reality and the truth of the matter is that Malawi government and LWB are the ones who have frustrated the contract.

“We will not tolerate or accept any unsubstantiated innuendos intended to bring into disrepute, Khato Civils, its directors, stakeholders and employees to go unchallenged,” reads the statement.

Khato Civils pointed out that Attorney General already advised LWB and Secretary to Treasury to re-engage the contract in October 2019 but that the board and Ministry of Finance have been playing hide and seek.

The firm said it has no option other than to seek legal remedy.

“This dispute has already been referred before an Arbitrator because LWB has clearly demonstrated that they have unilaterally decided to cancel the contract through their unprofessional conduct and the LWB has been given a list of possible Arbitrators,” reads the statement.

The firm has submitted all its documents to support their argument and “detailed evidence” that demonstrates indeed LWB has acted in “bad faith” and has failed to honour their contractual obligations.

Khato Civils is on record to have said that it spent U$71.2 million of its money on the required processes precedent to commencing the project this far and Malawi Government would be made to cough about K60 billion in compensation in the event that the contract is terminated.

The company had moved in with some of its heavy-duty equipment for what was to be a historic and iconic project to move water across a 120-kilometre stretch from Lake Malawi in Salima to Lilongwe.

The government renegotiated deal with Khato and there is also an agreement that apart from just taking the water straight from Salima to Lilongwe, diversions would be made in Salima for irrigation in the project’s second phase.

Lilongwe City is in its worst water crisis with the 2019 population showing the capital has over one million people and is projected to grow to 3.8 million by 2045.

LWB’s initial project of the Diamphwe Multi-purpose Dam Project, which was earmarked to avert the looming water crisis, hit a snag after the World Bank withdrew its financial backing.

The World Bank abandoned the project in 2017 over several disagreements, including a long list of people claiming compensation for being displaced.

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