Africa-Press – Malawi. Roads Fund Administration (RFA) has said contractors and the government are yet to find a solution to the suspension of construction works on some roads in the country.
RFA Chief Executive Officer Stuart Malata said projects continue facing hiccups due to contractors’ demand that the government adjust the pricing escalation formula following the devaluation of the Kwacha by 44 percent.
In November last year, the Reserve Bank of Malawi announced the devaluation of the local unit by that rate. Malata said this yesterday when he appeared before members of the Parliamentary Cluster on Transport and Public Infrastructure in Lilongwe.
He said RFA, the Roads Authority (RA) and Ministry of Transport officials are discussing the issue with contractors to find the way forward on the matter.
“It is not a small issue. It is quite a big issue because of the realignment of the Kwacha and also because prices of a number of materials and services have gone up. So, it is something that all parties are looking at.
“It has to be a win-win situation because this is essentially a negotiation. It is not that the contractors can just rise up and say ‘we want this’. The government is also a party to the contracts,” Malata said.
PHALE— This will be good for everyoneHowever, Parliamentary Cluster on Transport and Public Infrastructure co-Chairperson Enoch Phale asked RFA and RA officials to resolve the issue instantly.
“This will be good for everyone,” he said. On January 24 this year, contractors lamented rising costs of construction materials and the government’s delays to pay them.
Some contractors who engaged RA officials that time said they wanted a review of their contracts following the 44 percent and 25 percent devaluation of the Kwacha.
RA officials invited the contractors to a roundtable to map the way forward on the matter and discuss how they could resolve other issues to ensure progress of the works.
But speaking on behalf of fellow contractors, engineer Rocky Kaunda from Dika Construction Limited, said the contractors had not been given a good environment to work in, adding that this had affected delivery of the works.
“The environment in which we are working is a harsh economic environment in the sense that we recently experienced some price changes following the devaluation [of the Kwacha]. Some of the contracts we are discussing now were tendered as early as 2021 and, as such, it will now be very difficult for one to work on prices that were agreed upon in 2021, as prices have gone up now.
“For a contract to be delivered, you need the entire package; the prices must be right and conditions of the contract must be in a way that is favourable to the entire spectrum. If government says ‘we can’t raise the contract prices’, then the contractors will say ‘we can’t work’ and the result is that there is mutual agreement to terminate the contract,” Kaunda said.
He, however, said this would be the worst decision government would make because that would mean going back to the drawing board. “What that would mean is that government should go back to the drawing board and tender the contracts and that would mean tendering at the current prices. So, we will be back to this same place with new prices still but the inconvenience of terminating [a contract], is it worth it? These are the issues we need to discuss,” Kaunda said.
The contractors said they wanted the Materials Price Escalation Clause in their contract to be revisited and have a non-fixed prices one considering how prices had changed.
The contractors also expressed concern that they were not being paid and that this had led to others slowing the pace of works and others abandoning the works.
They said they were assured that road projects had guaranteed funding and that there were bonds and other monetary support mechanisms. They, however, said, to their shock, they have been running the projects for almost a year with only a single payment.
One of the contractors said there is a need for government to change its approach on contracts. “My colleagues would agree with me that if we have received two payments in this period, then we are very lucky. Most of us have only received a single payment in 12 months and these are the projects we want to be executed in 18 months.
“Our contracts clearly state that an invoice is supposed to be paid within 56 days and that, after 56 days, we are supposed to issue temporary suspension or stop the works because there is no payment. So this means every 56 days we will have a suspension. How can we get to have the projects delivered on time?” said another contractor who refused to be named.
Some of the road projects over which contractors met RA officials included the Chitipa-Ilomba Road, Dzaleka-Ntchisi-Malomo Road and Thuchila Bridge in Mulanje District. Other works that have slowed because of financing challenges include the six-lane road at Parliament section and the Kamuzu Central Hospital section.
Speaking when opening the discussions, RA Board Chair Reverend Matilda Matabwa said then that it was unfortunate that some works were delaying as the development had culminated in people pointing fingers at the authority.
“It is sad that the works are delaying. Some contractors are not even on site; people are asking questions. Many other projects are delaying. They have raised issues about devaluation, which has led to price escalation on the ground; issues of cement, fuel. We understand the challenges they are encountering,” Matabwa said.
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