MILUPI TAKEN TO TASK OVER DUAL-CARRIAGEWAY DEAL
Thursday 9th March, 2023
The infamous Lusaka-Ndola dual carriageway deal has raised public discontent and uproar; and following the ongoing public hullabaloo, Minister of Infrastructure, Hon Charles Milupi was compelled to issue a Ministerial Statement in Parliament. Unfortunately the minister’s statement has infact raised more questions than answers.
As stakeholders, we have decided to seek answers from the minister over this sham deal;
1. In every Public Private Partnership (PPP) agreement there are two sides, the public being government and the private partner being MESSRS MACRO OCEAN INVESTMENT CONSORTIUM which includes NAPSA and WORKERS COMPENSATION FUND CONTROL BOARD (WCFCB) among others. NAPSA and Workers Compensation Fund Control Board are quasi government institutions. In case of a dispute between the government and the concessionaire, for instance, if the concessionaire fails to deliver the project on time or according to the agreed upon specifications, there will arise a serious conflict because if government is aggrieved, it cannot seek legal redress in courts because government cannot sue itself since NAPSA and WCFCB are part and parcel of government. So can the minister tell the nation how government intends to guarantee the interests of the public and that of NAPSA and WCFCB in case the concessionaire fails to deliver the project according to the agreed timeframe and specifications?
2. In clause 10 of the Ministerial Statement, the minister states that the contract was awarded at “AN EXORBITANT PRICE of US$1.250 billion and this is in comparison with the contract sum of US$ 649,976,167.00.” Can the minister confirm that the reduction in the cost is due to the fact that the scope of works has changed/reduced and not because of price adjustment? Is it not true that prices of materials and all logistics required to build the road have actually increased? Can the minister avail to the Zambian people the Bill of Quantities (BoQ) for both the initial contract and the new one so we can compare and contrast the scope and cost of the works to be done. It is important that this information is availed to the public because as it is, we are not comparing like for like? We are comparing apples and oranges. If the scope of works is not the same then it is totally illogical and malicious for the minister to compare the two amounts.
Further, the minister is insinuating that there was corruption in the awarding of the initial contract; in-fact, he is insinuating that the initial cost/price was highly inflated, the question therefore that needs an honest answer is, if indeed the initial price was exaggerated, why has the government awarded the contract to the same contractor (who is part of the Consortium) if the contractor indeed exaggerated the initial cost? Does that make sense?
3. The minister in clause 42 of his statement states and I quote “besides that, NAPSA are not the only ones LIKELY to be approached for POSSIBLE investment in the project. They are just PART OF THE POSSIBLE funders.” According to the ministers statement, NAPSA has not yet committed to funding this project. In the absence of a conclusive financing arrangement, what criteria was used to pick the concessionaire and how then did government proceed to sign the contract with the concessionaire before conclusion of the funding agreements with NAPSA and others? What is going to happen if NAPSA decides to abandon financing the project? Has government been lying when it says that it has signed the deal with NAPSA?
4. As per clause 49 of the minister’s statement, we are guided by the total revenue over the concession period by the government share of total gross revenues of US$ 432 million, and using an average of 10% (as stated in clause 48 i.e range of 1.5% to 15%), the concessionaire will collect a total amount of US$ 4.321 Billion. After deductions of envisioned accrual to government (US$ 1.172 Billion), Repayment of loans to the financiers of approximately US$ 1.000 Billion(including interest) and future maintenance costs of approximately US$ 300 million, the gross revenue accrued to the concessionaire will be colossal total of US$ 1.849 Billion representing 289% of the investment. Looking at the insane profits that the concessionaire will rake in, does this deal surely make any financial sense to the public? Why can’t NAPSA just pay the concessionaire for the works and then recoup its money and take in profit by taking over toll fees for the period of the concession than paying for the project and allowing the concessionaire collect the toll fees for the next 22 years? This way all the estimated 1.8 Billion profit will go to the public coffers and be used for other developmental projects.
5. In clause 35, the minister emphasizes that the deal is ‘’good” because according to him, there was no requirement for a sovereign guarantee. Ba minister, how could there be need for a sovereign guarantee when the money being used is public money, money for pensioners?
Looking at the above, this deal does not make any financial sense and must be withdrawn and redone.
Issued by;
Antonio Mourinho Mwanza
Media Director
Patriotic Front