Malawi government probes Mota Engil actions

The Malawi Government has scheduled two separate surveys to assess the level of satisfaction among passengers of Mota Engil’s Malawi Shipping Company (MSC) vessels and customers of the Monkey Bay Shipyard, The Nation has established.

This follows revelations that the 35-year concession that privatised Malawi ports to MSC has disadvantaged fishers in Mangochi who initially depended on the country’s lone dry-dock at Monkey Bay Port.

Two weeks ago, The Nation reported that MSC has, among others, raised rates to levels that small-scale businesses say are unbearable. The company is also accused of not respecting agreed schedules with companies such as Maldeco Fisheries.

The scheduled surveys are in spite of the Public Private Partnership Commission (PPPC) already indicating in its recent report that government is satisfied with how MSC is operating.

Reads the PPPC’s report dated May 2013: “MSC performance is satisfactory and government is very pleased with their efforts to revamp the marine sector transport to a large-scale. We expect to see much more improvement in performance next year.”

The review has so far scored MSC highly although stakeholders argue they were not consulted.

In a recent interview, director of Marine Services Lastone Makuzula confirmed that the special monitoring committee includes PPPC, Marine, Ministry of Transport and Public Infrastructure, Government Contracting Unit of the Office of the President and Cabinet (OPC) and the Ministry of Finance.

“Yes, we have set up a monitoring committee whose report will be published in the media. We have programmed two surveys on customer and passenger satisfaction,” he said, adding: “It will be important to talk to people concerned.”

Review of the concession

A report of the May 2013 review of the concession, coming over a year after MSC took over running of the ports and previously government-owned vessels, found MSC satisfying most aspects of the concession.

In a separate interview, PPPC chief executive officer Jimmy Lipunga affirmed their stance that “we could not find anything better than this.”

Said Lipunga in an e-mailed response: “Generally, MSC has demonstrated unquestionable technical and financial competence in the shipping industry. They have carried out significant rehabilitation works on the Ilala and other vessels. The overall quality of shipyard infrastructure has greatly improved.”

But users of the infrastructure, particularly Monkey Bay Port, feel they needed to be consulted for their input on the way the port is being run.

“We needed to input into their findings because there are a number of lapses and some services have gone down,” said Maldeco general manager Ken Mthunzi.

He cited the slipway to the part where the company docks its fishing vessels. He said trucks can no longer drive closer arguing the pathway is not fit.

On a scale of zero to two—where zero is a benchmark—negative one is poor performance, one is satisfactory performance and two outstanding performances, MSC was scored 1.013, according to the PPPC review.

“MSC has achieved an average score of 1.013, representing performance slightly higher than the satisfactory level,” reads the review in part.

Lipunga argued that Monkey Bay Port “is now much cleaner than before” but Mthunzi says: “It still leaves a lot to be desired.”

Said Lipunga; “There will always be bits of issues, but generally MSC has performed well so far.”

However, Mthunzi countered: “Performing well to whose satisfaction if we users are not being cared for?”

Notwithstanding Lipunga’s praise, the review report, which we have seen, notes that MSC has not moved on three important aspects of the 35-year long concession to run vessels and ports on Lake Malawi.

Shareholding in MSC

The concession demands that Mota-Engil sheds 15 percent shareholding in MSC to local partners or partner, but as of July 2013, the company was still 100 percent owned by Mota-Engil.

“Malawi Shipping Company is contractually obliged to invite Malawian equity participants to take up 15 percent of MSC stake as a Malawian empowerment initiative,” reads the report in part.

Under the concession, signed in November 2011, the company was obliged to establish what is called Employee Share Ownership Scheme (ESOS), to allow workers buy shares in the company.

The company has been silent on this matter so far.

“MSC undertook to establish the [ESOS] within the first five years. It has not yet done that as MSC process of organisation is ongoing, but they have three more years within which to fulfil this requirement,” says the report.

The company is supposed to produce financial statements three months after the close of concession year, but there has been a delay in MSC submitting a copy of the audited accounts to government.

As we went to press, MSC general manager Carlos Mendes had not responded to our e-mailed questions sent to him earlier.

MSC owes govt

When taking over services of the Malawi Lake Services, MSC undertook to buy all vessels initially owned by government at a cost of $3.5 million (about K1.2 billion).

As of July end, MSC had only paid $2.7 million (K918 million), leaving a balance of $800 000 (about K272 million).

“MSC will pay the balance on August 8 [2013]. The economic challenges that dogged this country two years ago affected the pace of settling the purchase price,” said Lipunga.

We could not immediately ascertain if the payment was made as we went to press.

“We cannot punish the operator based on factors that affected everyone,” he added.

According to the PPPC report, MSC reported a net loss of K293 million at the close of 2012 partly blamed on the Ilala being out of service.

At present 62 percent of MSC revenue is from cargo services, according to documents we have seen.

Since the concession was signed, the company has transported 30 492 passengers using MV Ilala between November 2010 and June 2012 when the vessel was withdrawn for rehabilitation.

On the cargo side, the company is currently ferrying cement, maize, coal and bitumen. By May 2013, it had transported about 37 million metric tonnes using Viphya and Katundu vessels.

According to Mota-Engil chief executive officer for Africa Gilberto Rodrigues, the company planned to invest K2 billion to renovate all ports.

So far, the company has spent $874 000 (about K297 million) for the rehabilitation of MV Ilala, MV Karonga and MV Katundu.

MSC is scheduled to commence rehabilitation of MV Thyolo, MV Mulanje and MV Dowa at an estimated budget of $300 000 (K102 million).