Malawi could pay East Bridge K273 billion for cancelling fertilizer deal

Sosten Gwengwe is a politician in Malawi who serves as a Member of Parliament and a cabinet minister

Gwengwe: We have recalled guarantees signed with East Bridge

Malawi Government could be forced to pay K273 billion to East Bridge if the government cancels a commodity exchange deal with the company, which is suspected to have been established by ruling Malawi Congress Party (MCP) operatives to loot public funds.

Under the deal, East Bridge Estate is expected to supply 600 000 metric tonnes (MT) of fertiliser worth $124.5 million (about K128 billion).

In return, Malawi will provide agricultural produce to East Bridge over a period of two years.

Government through Minister of Agriculture had been defending the deal for months saying it would save forex despite criticism from various quarters including Malawi Law Society and activists.

Attorney General Thabo Chakaka Nyirenda also told the Ministry of Agriculture that the deal was undertaken without following proper procurement and authorisation procedures.

Reports now indicate that government wants to cancel the deal as it seeks to secure a program with the International Monetary Fund (IMF).

“We have recalled the sovereign guarantees on the advice from Attorney General. Ministry of Finance’s concern is only the sovereign guarantees which were recalled on the 12th of July,” Minister of Finance Sosten Gwengwe has told Malawi News.

However, East Bridge, which is said to be a Romanian company, has already set up offices and recruited people in the country to facilitate the fertilizer deal.

The company has told Malawi News that it has already spent $250 million (about K273 billion) on various activities including travelling to various countries to negotiate with fertilizer suppliers and port authorities.

One of the local directors of East Bridge, Teddy Moya, said they have not received communication from government about the termination but they believe government cannot pull out at this stage.

“We have spent over $250 million but government has not told us that it has terminated the contract.

“Our terms and conditions are very clear and if government terminates the contract, the terms and conditions of the contract will surely be followed.”

He added that they they will “obviously” take steps to force government to refund the K273 billion already spent on the deal.

Speaking to Malawi News, Gwengwe said his ministry only withdrew the sovereign guarantees and the Ministry of Agriculture which signed the deal will handle the rest.

“Canceling can only be done by parties to the contract in this case, Ministry of Agriculture, we have just recalled the guarantees,” he said.

Activists and opposition Members of Parliament have been warning government that it would lose taxpayers’ money by going ahead with the controversial fertilizer deal. Some social commentators believe that MCP agents set up East Bridge to defraud Malawi Government. Malawi24 could not verify these allegations.

Last year, Government also lost K750 million which was paid to a bogus company engaged to supply fertilizer for the Affordable Inputs Program.