Water utility Blantyre Water Board’s (BWB) US $14m debt is forcing the firm to suspend all outflows of non-essential items. European Investment Bank (EIB) reportedly banned the board from being a recipient of financing from the institution. This was after an audit revealed irregularities ranging from fraud to poor documentation of project fund.
According to an internal memo to members of staff BWB is to pay Electricity Supply Corporation of Malawi (Escom) US $2.5m of its outstanding electricity bill. The money keeps Escom from switching off their power.
According to BWB acting chief executive Henry Bakuwa, September 15 is the deadline for making payments to Escom. US $1.4m is the initial amount required and the latter paid on weekly installments of about US $280,000 per week by 30 September. Any amount thereafter is in monthly installments until December this year.
In the memo, Bakuwa also informed staff that BWB paid US $280,000 to Old Mutual Malawi. The amount will serve to reduce pension contribution arrears. In the statement He further adds that BWB has suspended items until its financial status improves.
BWB is to start repaying the US $924,000 loan from European Investment Bank. The inspectorate general of the bank gave out a summons for the board after failing to explain on some of the issues which were raised.
Furthermore, the report indicated a lack of original bid documentation. 50% of the procurements examined and original bid submission documentation also failed to add up. Furthermore, EIB found similarities in bidding documents from submissions of two successful suppliers. Contrary to the 33 and 10-year maturity and grace period granted earlier, the board is to start prepaying the loan before the commencement dates.