Khato Civils response to Lilongwe water project - Khato Civils (Pty) Ltd.

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24 June 2019
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Khato Civils response to the article in nation newspaper on Lilongwe water project

The story which has appeared in The Nation Newspaper and Nyasa Times editions of Monday, June 24, 2019 respectively is factually incorrect and misleading.
Malawians may wish to know that up to US$71.2million of Khato Civils money has been spent so far on the required processes precedent to commencing the project this far. Since our appointment we have worked tirelessly to ensure that we meet all conditions precedent to the Contract and indeed all these have been met without exception.

We have completed all the designs of the pipeline meter by meter from Salima to Kanengo and the construction drawings and plans have been accepted and approved by Lilongwe Water Board. Khato Civils is ready to start with construction activities anytime once government concludes the loan agreement with the financiers.

Our contract with Lilongwe Water Board is still valid and if government wishes to cancel as reported by your newspapers then Khato Civils will be entitled to full payment of all expenses incurred to date. Government of Malawi through Lilongwe Water Board has both legal and financial obligations to fulfil towards the contract and if they so wish not to continue with this project we will without a doubt exercise our legal rights if that arises.

Any signatory to this contract who decides to terminate must understand that there are financial consequences for all involved.
Since our appointment we have introduced potential financiers/lenders regarding the funding of the project and unfortunately the Malawi Government could not agree on terms of the loan repayment.

Our contract stipulates clearly that we must source funding for the project but does not place any restrictions what so ever in terms of where and how the loan has to be obtained. In this regard, most of the funders approached are from the open market and provide such loans with interest varying from 4-6 percent.

Government on the other hand wanted to pay an interest of less than 2% per annum over a period of 20 years and part of the loan to be debt free (concessionary loan).

There is no clause in our agreement where we are required to only source funding that will have a loan portion classified as concessionary. It is important to note that such types of loans can only be provided to government via financial institutions such as the World Bank and IMF and only government can enter into such negotiations. Our legal obligation is to source the loan from the open market and all what is required now is for government to agree on repayment terms.

Our last meeting with representatives of Malawi Government and prospective funders took place from 29th April to 2nd May 2019 and in principle agreements were finalised pending a meeting with former Minister of Finance, Honourable Goodall Gondwe.

Unfortunately due to national elections that took place on May 21, 2019, we had to wait for the new administration to be in place in order to bring financiers to finalize details of the loan. At this juncture there is no impediment on our side and government and financiers must meet and discuss the loan agreements.
Khato Civils is ready to commence with construction of the project as we have fulfilled all conditions precedent to the contract and therefore your story is not accurate and lacks basis. Only if the Nation and Nyasa Times newspaper reporter cared to contact us before publishing the fabrications about Khato Civils and the project, we would have provided you with proper update of the project.

We believe this is one of many attempts from our detractors to win public opinion so that the project does not see the light of day. We remain committed to work on this project and bring necessary water to people of Lilongwe and surrounding areas.

As a company, we are ready to start with construction as soon as Government and the financiers reach an agreement. We wish to assure all Malawians that Khato Civils will undertake the project to the satisfaction of all stakeholders and the benefit of the country.

Issued by Mongezi Mnyani
Khato Civils CEO
June 24, 2019.

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