World Bank reiterates its worry with Lilongwe-Salima Water Project: Says the project has serious governance concerns
The World Bank has once again expressed worry over governance concerns surrounding the Lilongwe – Salima Water Project.
In its latest Malawi Economic Monitor, the World Bank says the planned Lilongwe- Salima Water Project raises governance concerns from the modality of its implementation, especially related to a lack of transparency around the borrowing of resources for government equity.
According to the bank, the water project also poses challenges for public finance management reforms, and also elevates fiscal risks that could potentially reduce gains from the ongoing fiscal consolidation process.
The bank further notes that recent revelations related to the procurement of defense equipment from a company linked to a businessman facing numerous corruption charges highlight the importance of the comprehensive roll-out and real-time utilization of the Integrated Financial Management Information System (IFMIS) across all ministries, departments and agencies (MDAs) and ensuring that transparent procedures for procurement processes are followed.
Malawi Government spokesperson, Information Minister Moses Kunkuyu, was not immediately available for comment Tuesday.
Currently, the government plans to top up the K105 billion loan it borrowed from National Bank of Malawi and NBS Bank for the Salima-Lilongwe Water Project by an additional K70 billion, as it seeks to booster its equity contribution in the project.
This is according to the NBS Bank PLC and National Bank of Malawi PLC (Lake Malawi Water Supply Project) Loan (Authorisation) Amendment Bill, 2024 which is expected to tabled during the current sitting of Parliament.
The bill seeks to amend the NBS Bank Plc and National Bank of Malawi Plc (Lake Malawi Water Supply Project) Loan (Authorization) Act (No. 20 of 2023), to include CDH Investment Bank Limited, as one of the lenders of funds for the Lake Malawi Water Supply Project.
The bill further seeks to revise upwards the sum of K105 billion that was previously authorised by Parliament, which now, due to the recent currency re-alignment, falls short of the US$100 million equity contribution from government into the project.
The bill, once approved, would bring government’s equity contribution to K175.1 billion at the current exchange rate, representing 30 percent of the total project cost.
Government awarded the contract for the project to Khato Civils and South Zambezi joint venture.
Briefing reporters in Lilongwe recently on the issue of government continued dealings with UK businessman Zuneth Sattar, Kunkuyu and Defence Minister Harry Mkandawire said the government has not engaged any new contract with Sattar related business entities and that neither are there plans of the same.
Kunkuyu said the legal effect of terminating a contract for public convenience is that government as a procuring entity, is under an obligation to pay for goods supplied, or goods delivered or goods that were under production at the time of the termination.
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