Forex scarcity cripples Lilongwe water project

Foreign exchange shortages have stalled implementation of the $315 million (over K500 billion) Salima–Lilongwe Water Supply Project as the situation has created cashflow constraints that are threatening to delay completion. Khato Civils finance director Pride Phiri said the project, which is set to pump 50 million litres of water daily from Lake Malawi to the capital city, has endured three months of funding shortfalls since January. In an interview on the sidelines of a site visit by the Parliamentary Committee on Natural Resources and Climate Change, he said if funding was secured immediately the project would be completed within the set timeframe.

“The resources are coming slowly and without certainty. That has a significant impact on our completion timeline,” he said. He said the project currently stands at between 33 and 36 percent completion, but observed that it has now entered a capital-intensive phase requiring substantial financial outlays, particularly for imported equipment.

So far, the government has disbursed about $80 million sourced from local commercial banks while Khato Civils says it has injected about $60 million. The committee has since pledged to lobby for increased funding to safeguard what it described as a flagship infrastructure project. Committee chairperson Tiaone Hendry said while members were satisfied with the progress made to date, they fully understood the financial hurdles confronting the project.

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“The project is massive and a lot has already been invested. It needs to be completed. It started some time ago and it should not stop now,” she said.

The Salima–Lilongwe Water Supply Project was launched in 2015 and is being implemented by a joint venture between Khato Civils and South Zambezi. The project involves construction of a 130-kilometre pipeline from Lifuwu in Salima through Dowa to Lilongwe. In April 2023, Parliament authorised government to borrow K105 billion, then equivalent to 30 percent of the project cost, from local commercial banks, following the devaluation of the kwacha.

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