Contractor to pay for botched K188m deal

State-owned Lilongwe Water Board (LWB) and a contractor of a K188 million mobile water treatment plant have ended a protracted legal battle for alleged breach of contract following the contractor’s agreement to refund the money.

In a letter dated June 17 2019 addressed to LWB chief executive officer Engineer Alfonso Chikuni, the water utility firm’s lawyers, Likongwe & Company, said the contractor Paramount Holdings Limited has committed to repay K175 346 958.96 in three instalments.

Chikuni: We will not get all the money

Reads the letter in part: “We are of the opinion that this is a good offer and the board should consider accepting it.

“We are of further opinion that the sum of K12 984 535. 80 [$18 000], which was used by your staff to travel to India, was used for its intended purpose, as such it is only fair that the defendant should not bear it.”

The contractor incurred a K12 984 535.80 cost to cover transport and accommodation for five LWB employees who travelled to India in 2017 to inspect the machine. Further, the K175 million refund could eventually be lower should LWB issue a value added tax (VAT) certificate to enable Paramount claim the VAT from Malawi Revenue Authority (MRA).

While the lawyers’ letter does not indicate whether inflation would be factored in the repayment, Chikuni, while confirming that the board has resolved the matter, said in an interview that the board has opted to look at the positives of the conclusion of the saga.

He said: “We made a stand that we believe is the best for the country. We have looked at the options and accepted that it is better that we receive back money spent on the project.

“Of course, we will not get all the money, but we find it reasonable that only money which the supplier paid as taxes and which he spent on sending our team to India for due diligence should be deducted.”

Efforts to speak to Paramount Holdings Limited managing director Prakesh Ghedia proved futile yesterday. However, he is on record as having said in an earlier interview that his firm was willing to repay the money.

He said: “We are a responsible company. If there is need to pay back money, we will do so.”

Ghedia also said that the machine had a “slight technical problem producing water standards as stipulated by WHO [World Health Organisation]”, but downplayed it, saying it would be fixed.

The machine, procured under a contract LWB/PWTP/G/01 between LWB and Paramount Holdings signed on January 11 2017, was supposed to pump water from any water source and purify it to be safe for consumption.

The contract had a one-year warranty period under which Paramount was supposed to be servicing the equipment, but the machine has been idle for over a year.

In a written response, LWB spokesperson Maurice Mkawihe said: “The plant was accepted after testing was done. However, when the plant was to be used later, it was found that it could not sustain production of good water quality. The supplier was informed of the malfunction. The supplier has, on several times, attempted to make good of the malfunction with no success.” While the machine has not been functioning, the LWB website highlights its procurement as a success in the ongoing public sector reforms championed by President Peter Mutharika.

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