MP Chihana query on SA’s Peermont deal at Malawi presidential hotel

Member of Parliament for Rumphi Central Constituency, Enoch Chihana has asked government to explain to the House the details of the contract details that Malawi government signed with Peermont Holdings from South Africa to manage Umodzi Park which include the Bingu International Conference Centre, the five star hotel and presidential chalets.

However, things seemed to be getting out of hand when some parliamentarians said the government is paying K150m to Peermont Holdings.

Speaking during the committee supply stage on vote 330 of Ministry of Information, Tourism and Civic Education which the Minister of Finance Goodall Gondwe asked the House to approve the revised budget of K4,788,423,936 from the approved provision of K5,453,106,579, Chihana asked government to explain  details of the contract  to manage the multi-million complex comprising the Bingu International Conference Centre, The President Hotel and the Presidential Villas in Lilongwe.

According to Chihana, he has information that the Malawi government is paying the operator of the hotel (Peermont) close to K150 million per month regardless whether the hotel has made profits or loss.
Chihana also asked the minister to tell the house how much so far they have managed to pay the Republic of China for the loan used to build the hotel .  Malawi government had borrowed $95 million from the People’s Republic of China to build the complex under a loan agreement payable in 30 years.

He also claimed he also has reliable information that the Malawi government has started repaying the loan.

Reacting to the questions, Minister of Finance Gondwe, said those are hearsay however said he did not have information.

Chihana challenged Gondwe that he must not forget that he at some post was in government and know some of the deals including the Peermont Holdings issue and it was important that government tell the house the truth of the matter.

Speaking to Nyasa Times in an interview, Chihana said  he indeed has information that government is paying Peermont holdings K150 million per month to operate the hotel, saying  it’s not wise for the government to be spending such an amount  a month paying foreign company for operating a local hotel which he says can be best done by local investors.

Peermont was given the deal in February 2012 but pre-contract negotiations lasted for over a year and so when president Bingu wa Mutharika died in April 2012, his successor Joyce Banda ordered the Ministry of Tourism and Umodzi Holdings to renegotiate the deal with Peermont, a development which Peermont accepted.

Subsequently, Banda decided to cancel the deal and offered a lease to  the Legacy Group Holdings to manage the complex.  Both firms are based in South Africa.