Malawi renegotiates ‘raw deal’ with Vale railway
Government wants Malawian investors to be owning shares in Brazilian company Vale Logistics and is renegotiating the deal to rehabilitate and build a railway through the country.
In December 2011, the Malawi government signed a concession agreement involving Mozambique and Vale.
Vale was to rehabilitate and build 136 kilometres of railway cutting across Malawi as part of a 912-kilometre railway project, funded primarily by Vale, to transport an estimated 18 million tonnes of coal annually from Vale’s Moatize mine in Tete, Mozambique, some 900 kilometres inland, through Malawi to the new deep water port of Nacala on the Mozambique coast.
In the raw deal, Malawi gave away corporate tax calculated at 30 percent and value added tax (VAT) at 16.5 percent, gave a number of other tax exemptions, and “technically accepted to forego potential foreign exchange earnings”.
But now Malawi government wants Vale to rehabilitate two more railyway kines from Limbe to Nsanje and another from Salima to Mchinji.
Spokesperson of Ministry of Natural Resources, Energy and Mining James Chakwera confirmed the negotiating deal, saying Vale is also being asked to give out 20 percent shares in Centrl East African Railways (Cear) to be allocated to Malawi citizens willing to invest.
Malawi government reportedly gave out a bit too much in the initial deal, due to lack of negotiating skills as the reason for the extent of the exemptions.
The government now wants an increase in concession fees in exchange of a guarantee to a K1.9 trillion ($2.7 billion) loan.
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If this concession goes through, by the Creator of the Heavens and the earth, this sell of is going to bring the Malawian (DPP led) Nation to shambles and will incur a wrath. A wrath surely a intend to be part off to the DPP Governement and they will see it most clear coming!
A good deal indeed especially on the habilitation of Blantyre-Nsanje rail which will assist in the transportation of Goods from the new port to inland. I wonder if the Blantyre – salima rail is in good shape. The Salima – Nchinji rail is vital also and would also be economical if it would link to Lusaka as well. The ministry of foreign affairs office in collaboration with the Transport ministry must attempt to negotiate to effect the project. This magnitude of Project from Lusaka through Malawi to Nacala, Mozambique would boost the economies of the three countries. Go for it… Read more »
Ministry of Trade and Industry, where do your staff use the knowledge and skills acquired through several trade negotiation courses?
Please go back in time and identify who was the responsible minister when the first deal was negotiated. Chances are he and a few others at the top were palm greased. The same goes for Kayerekera etc etc
Thats why you are supposed to involve procurement professionals in such deals. You have the ODPP office in place, why crying now that there was lack of negotiating skills on your part? Be serious you civil servants, some of us pay you salaries even if you are a ministry Director through my monthly PAYE. I have also a lot friends in the govt ministryies whom we attended same class and are working as Procurement Officers (MCIPS) why not utilise them.
Having a procurement qualification does not equal being sane enough. Look at how most corruptions have been perpetuated by people with remarkable qualifications including Lawers, Procurers, Accountans, t Administrators ETC. Definitely the deal tells you that some people benefited from the arrangement therefore the issue of poor negotiating skills is just a face saving