K128bn fertiliser deal, From Butcher To Pharmacy

As dust is yet to settle over last year’s botched Affordable Inputs Programme (AIP) fertiliser deal with a United Kingdom-based butchery, it has transpired that government has awarded a contract to a medical suppliers company to supply fertiliser for the 2023/2024 AIP.

Contract documents Weekend Nation has seen indicate that government, through the Ministry of Agriculture, has offered a Romanian company called East Bridge Estate to supply 600 000 metric tonnes (MT) of fertiliser worth $124.5 million (about K129 billion).

AIP beneficiaries await to redeem their fertiliser at one of the selling points in the previous season

According to the documents, the Ministry of Agriculture had been discussing the deal with East Bridge East since late last year and the deal was concluded last month.

The Romanian company is expected to supply 300 000 MT of Urea and 300 000 MT of NPK under a commodity exchange/barter agreement in a contract that will run until July 24 2024.

The Ministry of Agriculture and the Romanian company signed a Sale and Purchase Agreement on December 14 2022 and then a Commodity Exchange Agreement on March 23 2023 before issuing an addendum on May 18 2023.

According to the company profile sourced from East Bridge, the company is involved in the supply of medical equipment, with no clear line of production for fertiliser, but supports agriculture products.

As a payment security instrument for the contract, government issued three sovereign guarantees split in 200 000 MT with the first sovereign guarantee having a value date of 365 days while the second has 485 days and the last one with 605 days.

Gwengwe: The signature is mine, yes

“This guarantor confirms that it has obtained all necessary authority and powers for the issuing and execution of this guarantee and that this guarantee is enforceable in its terms.

“The minister here further warrants that all the necessary processes and procedures required in issuance of guarantee have been complied with in accordance with the Public Finance Management Act (No.4 of 2022) of the laws of Malawi,” reads the guarantee.

Minister of Finance and Economic Affairs Sosten Gwengwe signed the guarantee to the company on behalf of Malawi Government on May 19 2023.

In a brief written response, yesterday Gwengwe confirmed signing the government guarantee but referred Weekend Nation to the Ministry of Agriculture for further contract details.

He said: “The signature is mine, yes. It’s for the Sovereign Guarantee not the contract. For the contract details and why the MDA [Ministry, Department and Agency] entered into an agreement with East Bridge, you may need to contact the MDA.”

Suleman: This is one way of siphoning public funds

According to the contract addendum to Sale and Purchase Agreement made on May 17 2023, the Romania company will first deliver 300 000 MT being 150 000 MT of NPK and 150 000 MT of Urea.

The addendum says upon successful delivery of the initial 300 000 MT, the company will deliver the remaining 300 000 MT based on “a roll-over of the same guarantees issued in the event that the purchaser has provided the seller with commodities that cover the value of the fertilisers delivered or the issuance of the fresh guarantees to cover the additional 300 000 MT.”

The company is expected to make its initial delivery of 50 000 MT of Urea on July 25 2023 while the last consignment of 50 000 MT each of Urea and NPK will be made in July 25 2024.

In the deal, government will pay through supply of farm commodities which include 250 000 MT of soya beans, 250 000 MT of groundnuts, 200 000 MT each of pigeon pees and maize, 50 000 MT each of rice and sorghum and 25 000 MT each of cotton and sugar.

But chairperson of Parliamentary Committee on Agriculture Sameer Suleman described the contract as unfortunate.

“It’s really sad that after losing money to a UK butcher which we are yet to recover we are now going to a medical equipment company to supply us fertiliser.

“I want to warn those responsible that Malawians are tired with their theft because this is their money. If they dare continue with this deal, I will personally mobilise Malawians and lead something that will cause revolution at that ministry until the President clears the rubble,” he warned.

Suleman also blamed State House for allegedly approving dubious contracts with the aim of looting public funds.

“This is one way of siphoning public funds. Our economy is not okay because of things like this. I blame State House for these deals because there is no way a government sovereign guarantee of that amount can be signed without State House approval.”

Said Suleman: “I cannot blame the Agriculture minister any more but State House. How much do they want to steal? To a point where they want to see poor Malawians crawling on the floor?”

But presidential press secretary Anthony Kasunda declined to comment on the accusations, referring Weekend Nation to Minister of Agriculture Sam Kawale.

When asked to explain the deal, Kawale just said: “It will be explained in great detail.”

Transparency and accountability commentators Willy Kambwandira and Boniface Chibwana said the contract raises more questions than answers and “one would only speculate corrupt dealings.”

“Sadly this is coming as a result of indecisive actions on previous similar action of misconduct. It is this lack of action on corruption that will brew more incidents. This is being done because people know that they can get away with it,” observed Kambwandira, who is executive director of Centre for Social Accountability and Transparency.

On his part, Chibwana, who is national coordinator of Catholic Commission for Justice and Peace, observed that the country seemed not to be learning from previous mistakes regarding public procurements.

He said the present development “clearly shows that there are elements pointing to defective due diligence by government before making a proper public procurement decision”.

“What is more painful is that the government appears to be blatantly side-stepping or bypassing laid down public procurement and disposal of assets procedures and systems.”

In the previous AIP season, government was swindled about K750 million by a UK-based company which turned out to be a butcher that supplies meat and meat products. Government is currently struggling to recover the money through the courts in Germany.n

honour, acknowledged that Malawi and the US are important allies, with Malawi benefitting from the relationship which started a long time ago, in multiple ways.

Said Gwengwe: “Our relationship with the United States holds immense value to the people of Malawi. We are grateful for the enduring partnership built on shared values and mutual respect.”

He further said the US continues to be an indispensable developmental partner, as demonstrated by its active engagement in various programmes such as the United States Agency for International Development which has entered into a five-year bilateral assistance agreement with his ministry to support Malawi Vision 2063.

“This partnership seeks to materialize an advanced, self-reliant Malawi that prioritises gender equity and democratic accountability.”

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