Barely two days after President Lazarus Chakwera was sworn in, Khato Civils, engaged by Lilongwe Water Board (LWB) under the previous regime to execute a K400 billion Lilongwe-Salima Water Supply Project, instructed its lawyers to withdraw a court matter.
Chancy Gondwe, lawyer representing Khato Civils and South Zambezi, both headquartered in South Africa, disclosed in an interview on Wednesday that he got instructions from his clients to withdraw an arbitration process that was ordered by the High Court.
The two companies, which had initiated the arbitration process between them and the hiring entity, LWB, in which they were claiming over K55 billion for equipment mobilisation and demobilisation after it became clear the project was falling off during the administration of Democratic Progressive Party (DPP), informed their lawyer that talks were underway with the new Tonse Alliance administration.
A lawyer representing LWB on the arbitration process, Frank Mbeta, also confirmed in an interview on Friday to have received
the letter of the withdrawal of the arbitration process from lawyers representing Khato Civils.
But Mbeta said LWB was better-placed to comment on the way forward the utility body or government intends to take.
Finance minister Felix Mlusu said in an interview yesterday that Attorney General (AG) was the befitting officer to comment on the matter as it had legal issues that required his
But the AG Chikosa Silungwe in an interview on Wednesday said his office was not involved yet in any kind of contact and dialogue regarding the contract between Khato Civils and LWB.
He said if some interested parties had any intentions to approach his office on the way forward of the project awarded to Khato Civils and South Zambezi as a joint venture
in December 2016, they have not yet done so.
The major bottleneck for the project not to start was financing as government, through the former Finance ministers Goodall Gondwe and Joseph Mwanamvekha, felt the financiers Khato Civils identified, as part of the terms in the contract agreement, were expensive.
But Khato Civils chairperson Simbi Phiri at one point blamed some politicians and some government officials, saying they were bent at frustrating the project for their own selfish reasons.
The High Court on May 12 2020, ahead of the court
sanctioned fresh presidential election on June 23 2020, issued an order of appointment of an arbitrator, way after LWB had expressly said it wanted the contract terminated.
But Gondwe said in the interview that his clients and the new government are in talks and chances are high that the contact and dialogue may yield positive results to enable his clients to execute the much-awaited project.
“My clients instructed me that the court matter be pended as discussions are underway to resolve the bottlenecks. We were told to withdraw the arbitration proceedings which we did on June 30 2020.
“The amount that was being claimed was over K55 billion for expenses incurred in equipment mobilisation and demobilisation in an event that the project was not executed. My clients find it appropriate to do the job for the sake of the nation and get paid as opposed to the other way round,” he said.
In the withdrawal letter we have seen, Gondwe advises lawyers representing LWB that his clients were withdrawing the matter from arbitration after observing that it was clear that the new government was willing to meet and address key matters to ensure that the execution of the project starts in earnest.
The Lilongwe-Salima Water Supply Project has always stirred controversy as the project, for years, failed to roll out.
The matter has also been to court after Malawi Law Society (MLS) and other human rights activists challenged the awarding of the contract to Khato Civils, but the engineering company, even at Malawi Supreme Court of Appeal, has always triumphed.
LWB is also on record, during the DPP’s regime, to have said it wanted the K400 billion contract terminated because the contractor failed to find a financier, a claim Khato Civils has always dismissed as untrue.
The contractor warned the DPP regime that Malawi Government was to be made to cough $71 million (about K60 billion) in compensation in the event that the contract was terminated.
The project, if done, is expected to provide water to the city of Lilongwe via a 120-kilometre pipeline from Lake Malawi.
Khato Civils is on record to have said that it spent $71.2 million of its money on the required processes prior to starting the project