Govt U-turns on the K7.5bn maize deal
Barely a fortnight after donors raised eyebrows over a K7.5 billion governments’maize deal, Treasury says they are pulling out of the deal with a foreign intermediary company amid fears of overpricing.
The decision to purchase about 100 000 metric tonnes of maize came after government announced that 6.5 million people in the country will face hunger this year due to low maize harvests in the 2015/16 as a result of the prolonged dry spell which reduced maize yields by 39 percent.
Our sister paper Nation on Sunday first reported about the controversial deal and revealed that a group of donors were angry after learning about government’s intentions to procure maize from Ukraine and Brazil through the previously unnamed Dubai-based intermediary whom the Weekend Nation can now reveal as Eurostar Trading Company.
More eyebrows and questions over the company’s capacity were raised after it turned out that the company was to obtain a $105 million loan from the PTA Bank to procure the maize on behalf of government to be repaid at 2 percent interest up to 2018. Treasury was supposed to act as guarantor of the loan.
But donors feared government had rushed into the deal with a “shadow of Cashgate”.
The maize was to be purchased for State grain marketer Agricultural Development and Marketing Corporation (Admarc).
Government through Minister of Finance, Economic Planning and Development Goodall Gondwe defended the deal saying it would proceed despite concerns of overpricing. A delegation of senior government officials and Admarc also travelled to Germany where the maize was warehoused.
But Treasury spokesperson Nations Msowoya said Treasury had sent out a team to conduct a due diligence on the deal and decided against going ahead with it.
“We have done due diligence and while we initially stated that we found the terms of their offer to be competitive, as rightly reported by the media, we sent a team for fact-finding and based on their report, we are not signing the deal, and we will look for other sources of finance” said Msowoya.
