Rising costs choke local contractors
Rising costs have choked local contractors working on various road and other infrastructure projects who say this threatens the survival of their businesses.
The contractors further argue that the scenario contravenes legal provisions aimed at empowering local contractors.
They expressed their concerns at a meeting between local contractors, Roads Authority (RA) and Ministry of Transport and Public Works held in Lilongwe on Wednesday.
Engineer Rocky Kaunda, speaking on behalf of the local contractors, expressed frustration with government’s failure to revise their contract sums upwards following two major devaluations of the local currency, namely by 25 percent in 2022 and 44 percent last November.
He also said they were only given 10 percent upfront payment instead of the normal 20 percent.
Said Kaunda: “We were assured that these projects are financed and by the time these projects were rolled out we were told that there was a bond rather than funds were available.
“But to our shock we have run these projects for almost a year now and if you have received two payments in a year you are very lucky. Most of us have only received one payment and these are projects you want to be executed in 18 months.”
He described their working environment as the worst, adding that the payment mode is unreliable which makes it difficult to borrow funds from elsewhere.
His sentiments were echoed by other contractors outside the official meeting, who observed that at the time of signing contracts, cost of cement was at less than K10 000 yet the price has now more than doubled due to devaluation.
Their contracts, we gathered, have a clause that does not allow for a revision of the contract sum based on escalation of prices for materials.
In her remarks, RA board chairperson the Reverend Matilda Matabwa stressed that the meeting would not resolve the issue of revising the contracts as this will have to be presented to her board and other relevant authorities.
She, however, blamed contractors for their tendency to underprice contract figures during bidding for the sake of winning tenders.
Said Matabwa: “Our concern is the delay and this has a bearing on the cost. Some of these projects were supposed to be handed over last year in July or December…
“All these add up to cost overruns. In December, I visited Dzaleka-Malomo road and I wondered whether there is a project going on or not. These negatively publicise the RA.”
While the issue of revising contracts prices appears to be difficult to resolve, we have seen a letter reference number RA/02/05 dated September 29 2022 from RA to the Public Procurement and Disposal of Assets Authority (PPDA), requesting for approval for inclusion of a materials price escalation clause on numerous pending and ongoing contracts.
When we presented this information to Matabwa, she asked for more information while PPDA’s spokesperson Kate Kujaliwa is yet to respond to our questionnaire.
Roads whose progress has stalled due to this standoff include the Thuchila Bridge, upgrading of Dzaleka-Ntchisi-Malomo Road, upgrading of Chitipa-Illomba Road, rehabilitation of the M1 Road and the expansion of the Kenyatta Road in Lilongwe into a six lane project, just to mention some.
