amaBhungane: Facts around Malawi water scheme don’t wash

    0
    12

    It has emerged that Malawian billionaire
    Simbi Phiri’s company will assess the “feasibility” of a
    project from whose construction he stands to benefit – a move
    seen as a clear conflict of interest.

    Major questions have also been raised about
    whether the project – to pump water from Lake Malawi to the
    capital Lilongwe – makes financial and technical
    sense.

    The chief executive of the Lilongwe Water
    Board, Engineer Alfonso Chikuni, told amaBhungane this week
    that Phiri’s companies, Khato Civils and South Zambezi, had
    been “identified” and “would carry out feasibility studies,
    procure and construct” in a turnkey arrangement on the
    Lilongwe-Salima scheme.

    The approach has drawn fire, with critics
    arguing that it is unusual and involves an inherent conflict
    because the would-be contractor has an interest in glossing
    over pitfalls and overstating the feasibility of the
    work.

    Phiri announced in an advertorial in South
    Africa’s Mail & Guardian in January this year that Khato
    was “the successful bidder”.

    He put the value of the contract at
    $500-million, although Chikuni said the correct figure was
    about $396-million.

    Although managed by the water board, it has
    large implications for President Peter Mutharika’s government.
    Chikuni said the board would raise loan finance on the strength
    of a government “sovereign guarantee”.

    Malawi’s Daily Times reported that the
    project will commence at the beginning of next month and that
    construction will run for 24 months.

    In the M&G announcement, Phiri said the
    “ground-breaking scheme” would pump 50-million litres of water
    a day from Lake Malawi to the Malawian capital along a pipeline
    more than 130km long.

    It would be “a catalyst for growth, as it
    will not only improve drinking water, sanitation, hygiene and
    waste water management, (but) will see the growth of industries
    and the manufacturing sector leading to the growth of new
    towns”.

    He said it would also create 4,000
    jobs.

    A well-informed source who has analysed the
    contract, but asked to remain anonymous, told amaBhungane that
    a scheme of this size would normally take two years to
    prepare.

    Pre-feasibility and full feasibility studies
    should be conducted, as well as environmental and social impact
    studies, followed by detailed designs that are then made
    public.

    No investor can put in that kind of money
    without knowing if a project is feasible and economically
    sound.”

    The source said the design for the project –
    an engineering, procurement and construction (EPC) turnkey deal
    – is unusual and incorporates “a built-in conflict of
    interest”.

    Normally, the pre-feasibility and
    feasibility studies, and the detailed designs, are done by
    independent consultants through a tender, while construction is
    undertaken by the contractor supervised by the consultants who
    did the designs.

    Because the contractor is always keen to
    have the project built to make money, he can glorify the
    feasibility to win approvals for construction. The two should
    be separated.”

    The chairperson of Malawi’s parliamentary
    committee on natural resources and climate change, Werani
    Chilenga, complained that the government has not been
    transparent on the project.

    I cannot say I have heard or know much about
    it – all we know is that government will give a guarantee to
    Lilongwe Water Board to borrow money from overseas. As a
    committee, we are not happy and have many questions,” he
    said.

    Chilenga added that the committee fears the
    project is not economically viable and will do more harm than
    good to Malawians.

    Clearly government has upside-down
    priorities. We have power blackouts because Escom (the power
    utility) is failing to generate the required power due to low
    water levels. How do they think they will be able to generate
    the power needed to pump water from Salima on the lake to
    Lilongwe? Why should we be pumping water
    upland?

    This project is very costly and in the end
    the consumer will pay if the project
    fails.”

    Chilenga said principal secretary in the
    ministry of agriculture, Erica Maganga, failed to answer the
    committee’s questions when she appeared before the committee
    earlier this year.

    Maganga failed to convince us. She did not
    have a feasibility study or any information regarding any
    groundwork for the project, and yet Lilongwe Water Board has
    gone ahead and awarded the contract.

    We were not convinced about why this project
    should be carried out, bearing in mind the huge sums of money
    that could be wasted,” he said.

    AmaBhungane sent Maganga a detailed set of
    questions on the Salima-Lilongwe scheme, but she has failed to
    answer them over a two-week period.

    Khato Civils spokesperson Taonga Botolo also
    failed to answer amaBhungane’s questions (see
    sidebar).

    Major questions about the scheme were raised
    by one of Malawi’s foremost water experts, Kenneth Wiyo in two
    articles published in The Nation newspaper last
    month.

    Wiyo, associate professor at the Lilongwe
    University of Agriculture and Natural Resources, also
    emphasised that there has been no feasibility or
    pre-feasibility studies, or formal assessment of the possible
    impact on the environment and communities whose land will be
    crossed by the pipeline.

    Wiyo also asked:

    • Why has the low-cost approach of capturing
      river water before it reaches the lake, rather than being
      pumped uphill to Lilongwe, not been
      adopted?
    • The gravity method, used to feed water from
      Mulanje Mountain to Blantyre, would also create opportunities
      for hydropower generation, fish farming and tourism, Wiyo
      said;
    • Has any estimate been made of the power
      requirements of lifting water almost 2 000 feet from the lake
      to Lilongwe, and what will be the source of this
      power?
    • Wiyo said his students had estimated the
      required power usage at between 68 and 128MW, in a country
      where Escom failed to generate 300MW. He asked how the new
      demand would be squared with repeated blackouts and rationing
      across the country.
    • How much water is to be abstracted from
      Lake Malawi, and will it will have an impact on the outflow
      of the Shire River, affecting hydropower
      generation?
    • What is the required pipe size; how
      easily and quickly can the pipes be laid; and will they be
      locally manufactured or imported?
    • What route will the pipeline take, and will
      it need land bridges and aqueducts to cross rivers, gullies
      and dambos? Will a storage dam be needed, like Mudi Dam in
      Blantyre?
    • Have studies been conducted on soils and
      geological formations to inform decisions on the pipe
      material use? Wiyo said he knew of a Malawian irrigation
      project where nearly 9km of piping had been replaced due to
      corrosion.
    • Will the proposed pipeline route involve
      land tenure, settlement removals and compensation issues, and
      who will be responsible for compensating affected
      communities? Wiyo said that in the past enraged communities
      had chased ministers from project sites to protect their
      interests.
    • Why has an environmental and social impact
      assessment not been conducted, given that it is required by
      Malawi’s Environmental Management Act? Wiyo said it would be
      a criminal offence not to conduct such a study and not to act
      on its recommendations.

    The president of the Malawi Institution of
    Engineers, David Mzandu, said the project is technically
    possible, but added: “I cannot invest my money in something
    where I am not sure if I will get returns. If you are going to
    invest, you must know the economic
    viability.

    I am sure government is aware that such a
    huge project requires a feasibility
    study.”

    The director of water services in the
    agriculture ministry, Steve Mwanza, said he could not comment
    on the project.

    My office has no information about that
    project. Ask Lilongwe Water Board,” he
    said.

    The water board’s Chikuni confirmed that the
    board had signed an agreement with Khato Civils “subject to a
    couple of conditions precedent to effectiveness. Government
    arms have been consulted in the process”.

    He confirmed that the contractor will finance
    the project in terms of a government sovereign
    guarantee.

    He said six companies participated in a
    restricted tendering method of procurement, where contractors
    were selected based on technical experience on similar
    assignments carried out in Malawi or internationally, as well
    as on their reputation.

    The other bidders were the Sinohydro
    Corporation Ltd of China, PW Engineering of the United Kingdom,
    Mota Engil of Portugal, China Railway Engineering No. 21 and
    the Italian company, CMC di Ravenna.

    Khato and South Zambezi also operate in
    Botswana and South Africa, and Phiri recently made headlines
    after being found to be carrying $7.8-million in cash, which he
    had under-declared when crossing the
    border.

    The money was provisionally seized as
    possible evidence of money-laundering, but was returned to him
    after he approached the Gaborone High
    Court.

    The City Press reported last year that Khato
    Civils was paid R170-million for the emergency refurbishment of
    Giyani’s water and waste water plants, but that 18 months later
    “there was still little water to be had in Giyani’s
    pipes”.

    Phiri told the newspaper although Giyani
    still had water problems, the situation had improved
    dramatically.

    Visit to SA by Malawian
    journalists

    Simbi Phiri and his spokesperson, Taonga
    Botolo, declined to answer amaBhungane’s detailed questions
    about the Salima-Lilongwe water project, despite several
    telephonic and emailed attempts to obtain a
    response.

    But Phiri did accommodate other journalists,
    inviting about 10 Malawian media workers on a six-day free trip
    to South Africa last week to inspect Khato Civils projects in
    the country.

    The journalists arrived on Sunday March 12
    and were due to leave on Saturday March
    18.

    While in South Africa the journalists visited
    Giyani in Limpopo, where Khato Civils was paid R170-million for
    the emergency refurbishment of the Giyani water and waste water
    plants.

    Botolo was sent emailed questions about
    Salima-Lilongwe on March 9. In a subsequent phone exchange, he
    invited an amaBhungane reporter to meet him in Johannesburg
    during his trip, when he would answer the
    questions.

    When the reporter met him at OR Tambo
    Airport, he said he would answer some of the questions by email
    but needed to consult on others. He said he would
    call.

    Despite two reminders, no email or
    telephonic response to the questions was
    received.

    DM

    Photo of Simbi Phiri by
    Nyasa Times
    .

    Provided by:

    We are an independent, non-profit
    investigative journalism centre. Like this story? Be
    an 
    amaB
    supporter
    .
    Sign up for 
    our
    newsletter
    .
    Visit us at 
    amaBhungane.co.za.

    LEAVE A REPLY