Malawi pays over K500m interest on delayed payments
The Malawi Government paid over K500 million (about $1.4m) in interests for delayed payment in the 2011/12 financial year, a report by Roads Authority (RA) has shown.
RA in the report indicates that the government paid K581.18 million (about $1.7m) interest on delayed payments, K4.79 million (about $14 000) for compensation and relocation costs and K6.1 billion (about $17.4m) for contract claims.
RA chief executive officer Paul Kulemeka, in an interview this week, could not explain the huge amount paid on interest for delayed payment , but indicated the payment for contracts is under the Roads Fund Administration (RFA).
“RA certifies road works and payment is done by the RFA, so, I would refer you to them for an explanation,” he said.
However, RFA company secretary Ezra Dzoole when contacted for an explanation on the reasons for the delayed payments and the accumulated amount in interest, asked for more time.
The RFA Act provides for the following designated resources of income of the Roads Fund, Roads Fund fuel levy, international transit fees and appropriations by Parliament for the purposes of the Roads Fund, a percentage of road user levies including tariffs, taxes and tolls.
The Roads Fund also includes money paid to it by way of loans, grants or donations.
RA manages a public road network of 15 451 kilometres together with the 9 478 km undesignated road network that serves rural communities.
Government considers road infrastructure development as one of the main enabling factors for economic development for the country.
In the report, RA says that most of the 2011/12 activities were not carried out due to poor macro-economic and financial conditions in the country.
It adds that recurrent road programmes such as the rehabilitation of city roads, routine and periodic maintenance of tracks and trails were not implemented.
“During the year, only 60 percent of the budgeted financial resources for recurrent programmes was received. This was far below the requirements. The situation was worsened by fluctuation of prices of commodities such as fuel and bituminous products, among others, and the devaluation of the kwacha in the last two months of the financial year,” says the report.
There were also delays for the payment of contractors and consultants resulting into high interest charges and contractual claims due to passage of time.
The RA also says that there is generally a lack of capacity in the local industry in terms of heavy construction equipment, number of qualified firms and personnel especially at technician level and the inadequate financial management skills.
