Government pays K7.6 billion for idle road projects

Roads Fund Administration (RFA) has confirmed it is paying K7.6 billion bill to contractors in claims for compensations on six idle road projects.

The contractors want to be compensated on idle time on sites, price escalation and interests on delayed payments and the figure could swell as other claims are being processed by the Roads Authority (RA), which represents government projects implementation.

RFA Public Relations Officer Masauko Ngwaluko, whose institution represents government on financing of the projects, could not provide the total figure of claims so far, but those approved.

“What we can provide are details of the total claims that the RA had certified for payment and submitted to us for payment processing. We have so far received certified claims for payment processing of about K7.6 billion on six projects,” said Ngwaluko in a response to a questionnaire.

The six projects include Chiringa- Chiradzulu, Nsanje-Bangula, Ekwendeni-Ezondweni, Lumbadzi- Dowa-Chezi, Mzimba-Mzarangwe and Msulira-Nkhotakota.

However, he could not give figures on the projects that are co-funded by government and European Union, namely Lilongwe-Nsipe, Chikhwawa- Nchalo-Bangula and Mchinji Kawere.

The contractors involved are Fargo, Mota Engil, Cilcon, Shire Construction, Raubex Construction and, according to RFA, they have already pocketed K4.3 billion.

RFA has said the trend is negatively affecting road project financing as arrears continue to erode annual allocations for the road sector.

“This has rendered budgeting for roads almost useless and sees the allocated resources substantially used up by the end of the first half of the financial year and thinly spread across a number of projects – resulting in delayed payments and accumulation of arrears, making the government pay avoidable claims in idle time and interest on delayed payments,” Ngwaluko said.

Nevertheless, a recently released 2011/12 annual report by RFA has also shown that over K6.1 billion was paid on similar compensations with over K581 million charged on delayed payments.

Minister of Transport and Infrastructure Development, Sidick Mia, when approached, said he had to appreciate the situation before giving a credible response.

However, he acknowledged that government has cleared huge arrears recently which were accrued long time ago.

“Most of these arrears were accumulated long time ago and we have cleared all the arrears. That is why some projects like Zomba-Jali and Thyolo -Thekerani have resumed construction,” said Mia, asking for more time to appreciate the situation.

However, The Daily Times further finding has shown that more claims are being processed as most of the projects involved in the claims are far from being finished and will require more time than planned.

For instance, Mzimba- Nzalangwe road project which was launched in 2009 at a budget of K7.4 billion is likely to cost government more as the contractor (Fargo), having already claimed K860 million in compensation on price escalation and interest on delayed payment, will be making another claim.

For three years, the 62.8 km road project has had only 8.5 km completed despite having exhausted 41 percent of the road budget.

The contractor’s progress report shows “lack of adequate resources that could be injected into the project so that scheduled targets are achieved.”

A response on the questionnaire to RA indicated that more claims could be coming since the projects are ongoing.

“The Government of Malawi has paid for those that were resolved, and is still paying since some of the projects are ongoing,” said Kajanga earlier before referring the issue to either RFA or Ministry of Transport.