Hot on the heels of their recent famous victory in Botswana courts that released all Khato Civils frozen millions of Pula and cleared the company's executive chairman Simbi Phiri of any money laundering fears, the Malawi Supreme Court of Appeal on Friday cleared Khato Civils from allegations that it was flouting environmental impact assessment procedures in their implimentation of the multi billion Lake Malawi water project.
Contrary to widely publicised narrations that Khato Civils and Malawi Water Board were flouting Environmental Impact Assessment(EIA) procedures in the implementation of the US $500 million 120km Lake Malawi water project the supreme court of Appeal in Malawi on Friday dismissed such fears and allegations as hogwash and said it was clear from the contract between the developer and the contractor that the EIA had been included and that the fears of the Law Society or whosoever interest it represent was misplaced.
Malawi’s highest court, the Supreme Court of Appeal on Friday cleared the path for Khato Civils to go ahead full throttle with its P6 billion Lake Malawi water project which had been going at a snail’s pace due to a High Court battle launched by the Law Society of Malawi that challenged the execution of the project on account of the lack of Environmental impact assessment.
Justice Lovemore Chikopa killed the Law Society’s case against the Water Board and Khato Civils when he ruled that all High Court proceedings and rulings on the case were a futility after it was found that the Law Society, after being granted leave for stay of execution had failed to lodge the motion on stipulated time.
The ruling means Khato Civils and the Water Board can now proceed with their project as if no court order had been granted against them.
Despite ruling in favour of Khato Civils and the Malawi Water Board in nullifying all the High Court proceedings, the Appeals Court went on to consider all the merits of the case and stated that for the sake of justice they would not have shied away from making a favourable ruling in favour of the Law Society had their merits held any water despite the ruling to nullify all the proceedings.
However the Supreme Court found that even in their merits, the Law society’s arguments for the halting of the water project did not make any sense and that the matter should not have been brought before the courts in the first place.
Making a side remark in its ruling the highest court in Malawi found that the law society’s litigation, which had affected the smooth execution of the project since May this year, was premised on a very poor understanding of what the project entailed and therefore a waste of time.
Justice Chikopa observed that contrary to the Malawi Law Society’s shallow understanding of the project, it was obvious that an EIA was not necessary or a pre requisite for the first two components of the contract, namely the engineering and procurement as there would be nowhere to do it(the EIA) seeing as the pipeline route would not be known until, at the very least, after completion of the engineering component. The judge wondered why the litigants wanted to stop even the engineering and procurement components of the project that did not need an EIA to be carried out.
The judge was also quick to point out that it was clear in the contract that once the contractor and the developer of the project were done with the engineering and procurement components, the EIA would be implemented ahead of the commencement of the construction component. He said that was clear and not in dispute or doubt.
In fact the Court of Appeal ruled that there should never have been any fears or doubts in the minds of the litigants(the Law Society) as to whether the EIA would be flouted as both the developer and the contractor had been clear in their contract and intents that an EIA would be undertaken before construction works commenced.
The judge further said to demonstrate that there was no controversy at all the Water Board as the developer even went to the extent of advertising for and identifying an EIA Consultant for the project.
The Appeals Court also went further and told the Law Society that its litigation was based on a wrong understanding of the multibillion water project. According to the Appeals Court, while the Law Society understood the project as entailing ‘abstracting water from Lake Malawi in Salima, purification of the water and pumping it over a distance of 120kms to Lilongwe’, the project was much more than that. The Appeals Court said the Salima-Lilongwe water project is what is called an ‘Engineering, Procurement and Construction contract’.
According to the papers before the Court of Appeal the contract is in three components, the first of which was the Engineering component, where Khato Civils was among others supposed to do a feasibility study of the whole Project to determine among others its viability, the exact location on Lake Malawi where water would be tapped from, to determine the route which the pipes ferrying the water from Lake Malawi to Lilongwe would take, as well as a costing of the Project.
The second component, the court of Appeal said, was contingent upon the Malawi Water Authority sanctioning the engineering component and would involve the procurement of finance and equipment by the contractor, Khato Civils. The third component was the construction works which would only begin after the first two components had been successfully executed, the judge explained.
“Even on a cursory perusal of the Contract it is obvious that an EIA was not necessary for the first two components of the contract. There would be nowhere to do it seeing as the pipeline route would not be known until, at the very least, after completion of the engineering component. It is on the other hand a fact that an EIA would be necessary before the construction component of the contract commenced”.
Trouble started in May this year when Khato Civils brought into Malawi their state of the art trenching equipment worth about P50 million. It is these equipment that the Law Society referred to as evidence that the Malawi Water Board and Khato Civils had already started implementing the Contract without doing an EIA.
“The Society was perhaps reading too much into the above. To begin with a proper reading of the Contract and the briefing Notes shows that Khato Civils had to prove capacity including possession of requisite equipment.
Possession out of Malawi would not make too much sense. There should therefore be nothing wrong with Khato Civils bringing trenchers into Malawi. It is not evidence that they have started trenching. Or will soon start. Only perhaps that they would be ready to do so when necessary. And we do not think that they should be punished for flaunting their capacity to execute the contract. In fact they ought to be lauded”, judge Chikopa further said in his ruling.
Khato civils is a multi billion rand grade 9 civil works and engineering firm headquartered in Midrand, Johannesburg owned by Simbi Phiri, a naturalised South African born of Tonota, Botswana, mother and Malawian father.
In Botswana Khato Civils are eyeing another multi billion water project, the North South water carrier 2.2. They are also setting up a half a billion pula investment in Gaborone, being the regional headquarters for their heavy plant equipment partner, Tesmic, of Italy. The local entity Khato civils Botswana has already submitted drawings to the Gaborone City Council to pave the way for the project expected to directly hire over 1500 locals on a permanent basis.