Government allocates K500 million for Lilongwe -Salima water project

When government announced the multi-billion kwacha Salima-Lilongwe Water Project in 2016, it gave the impression that the water would flow soon. Government has allocated K500 million to the Special Purpose Vehicle secretariat for the Salima-Lilongwe Water Project. Minister of Finance Sosten Gwengwe told Malawi News on Thursday that the money will…

Government has allocated K500 million to the Special Purpose Vehicle (SPV) secretariat for the Salima-Lilongwe Water Project.

Minister of Finance Sosten Gwengwe told Malawi News on Thursday that the money will among others be used for secretariat work and processing financing agreements.

“The money will be used for financing agreements, preparatory works and documentation and listing for a private stake in the project, among others,” Gwengwe said.

This comes after Ministry of Water and Sanitation indicated in January 2023 that all negotiations were finalised and that the government would fund the project.

Chairperson of the Parliamentary Natural Resources Committee Werani Chilenga said as years go by the Capital City is sitting on a time bomb where one day the struggle for water will be uncontrollable.

He however said this allocation could be the beginning of verifying and rectifying some of the issues that have marred the project since its inception.

“It could be one of the ways to verify the issues surrounding the project. That could be a catalyst to resolve the issues. However, the delay has been way overdue,” he said

Transparency and accountability commentator Willie Kambwandira said Malawians have begun losing confidence in the Lilongwe-Salima water project, arguing there are a lot of issues that have been associated with the whole project.

He said the allocation to the SPV could as well translate to an action that people could benefit from.

“Our concern is that the continued delay is denying Malawians access to affordable, reliable, and safe drinking water. It is sad that the project is embroiled in very unusual procurement processes and procedures.

“Again, the cost of financing this project will be the same, and prices of project materials are rising. We must take politics out of this project; otherwise it appears there are so many vested interests,” he said.

Secretary for Water and Sanitation Elias Chimulambe said in January 2023 that the Salima-Lilongwe Water Project remains one of the government’s flagship projects.

“We had some challenges with the financing arrangement [but we are] now coming to the conclusion, which means we are ready to roll out the Salima-Lilongwe Water Project and I would like to confirm that the Ministry of Finance and our ministry are ready to start it [this year],” Chimulambe said.

He added that there is a financing arrangement in which the contractor of the project would source the funder but in line with government conditions.

“But, whatever the case, it is the government that is funding… if it is a loan, it means the Malawi Government is funding it, it is not necessarily important as to who is giving out the loan,” Chimulambe added.

In the project, Khato Civils and South Zambezi, who are the contractors, were supposed, to identify a financier, with the government providing a sovereign guarantee for the loan.

In March last year, Gwengwe told Parliament that the government had identified an Australian finance company, Quay Energy, to provide a $330 million loan for the project.

Later, Gwengwe said Quay had proven it did not have the capacity to raise the required financing.

However, in December 2022, Quay dismissed Gwengwe’s claims that it was struggling to find finances to roll out the project.

Quay Director Anthony Leenders said the financer had been in constant negotiations with the government since November 2021 to agree on terms of financing the project.

He said while it may appear that the negotiations have taken an unreasonably long time, it was to ensure that all local legal requirements are fully complied with.

The scheme would pump 50 million litres of water a day from Lake Malawi to Lilongwe along a pipeline more than 130km long.