Funding suspense on APM road projects

Government has engaged contractors on four road projects and contractors are already on site on some of them, but Weekend Nation has discovered that it has not yet secured funding for the projects.

The projects were also not provided for in the 2017/18 National Budget.

The road projects in question are the K9.6 billion Ntcheu-Tsangano-Neno, Lirangwe-Chingale-Machinga pegged at K5.3 billion, and the Rumphi-Hewe-Turn-off Road to cost K5 billion. The other project is the Blantyre ring road, which government says will be constructed at a cost of K4.6 billion.

Treasury spokesperson Davis Sado in an e-mailed response on Wednesday confirmed that contractors were currently on site in the four projects where they are mobilising and moving equipment.

Said Sado: “Mota Engil has been engaged to construct the Lirangwe-Chingale-Machinga Road while Tahit Networks has been hired for the Blantyre bypass road.”

He said the Malawi Defence Force (MDF) engineering battalion has been engaged to do the first 21 kilometeres (km) on the Ntcheu-Tsangano-Neno Road.

But, as of Thursday, there was no sign that the potential financiers of the road projects—to be funded through loans—would release funding anytime soon.

In a telephone interview on Tuesday, Finance Minister Goodall Gondwe said government was yet to secure funding from financiers on three of the four projects.

Gondwe said: “On the Ntcheu-Tsangano-Neno Road we are going to start [with local resources] while waiting for the Chinese to come in. At the moment, we are waiting for the Arab Fund and Badea to give us money for the Lirangwe-Chingale-Machinga Road. As for the Blantyre bypass road, we are discussing with the International Commercial Bank of China. But we are going to use local resources for the Rumphi-Hewe Road.”

However, when asked to indicate the exact stage at which discussions on the loan discussions are, Gondwe was non-commital.

“I cannot tell you exactly at what stage we are. All I can tell you is that we are still discussing terms. Our colleagues in China are expecting a delegation from Malawi to go and finalise the discussions.

“But there are some problems with our Arab friends on the Lirangwe-Chingale-Machinga  Road, which we need to address,” he said.

The government of Malawi and the Kuwait Fund for Arab Development in 2013 signed a $10.2 million financing agreement in form of a concessional loan for the Lirangwe-Chingale-Machinga Road, but construction did not start because the money was not enough for the project. Gondwe said government is now renegotiating the loan.

There is no provision of funding for the Rumphi-Hewe Road in the 2017/18 National Budget documents.

Gondwe did not give the time frames for the completion of each of the four road projects.

Both the Roads Authority (RA) and the Public Procurement and Disposal of Assets Authority (PPDA), formerly ODPP, were yet to respond on whether contracts had been signed between government and the contractors on three of the four sites.

When Minister of Transport and Public Works Jappie Mhango was making a statement on the status of road projects in Parliament in February, he failed to provide detailed information on financing for the four road projects.

Chancellor College professor of economics Ben Kaluwa, in a telephone interview on Wednesday, raised questions on government’s handling of the projects.

“There are already a lot of questions on government’s handling of finances. We still have the MSB (Malawi Savings Bank) toxic loans and the K4 billion issues. Now the government is implementing road projects with lightning speed saying it has money while banking on borrowed money. Going into an election year, this could bring a lot of doubts over government’s intentions. What if the money from the so-called partners doesn’t come?” he asked.

In 2015, government issued promissory notes for K6.1 billion to MSB to rescue 13 companies and individuals that defaulted loan payments to the defunct bank, after FDH Holdings acquired 80 percent of government’s shareholding in MSB.

Government recently drew criticism from opposition members of Parliament (MPs) and civil society organisations (CSOs) when it came to light that 86 MPs who voted against the Electoral Reforms Bills (ERB) would be paid a total of K4 billion. The CSOs have planned nationwide demonstrations on April 27, to protest government’s poor handling of governance issues.

Gondwe’s statement on the status of funding for the road projects follows pronouncements chairperson of the Budget and Finance Committee of Parliament Rhino Chiphiko made, that government’s decision to embark on the roads projects without commitment from donors smacked of hypocrisy.

Chiphiko described the projects as unrealistic and a campaign gimmick for votes.

“What we are concerned about is that the government has started rebuilding arrears because these projects are being funded through promissory notes.”