Another cashgate could be in the offing as the contractor for the Marka-Bangula Railway Project design, upgrading and rehabilitation is now demanding a 40 percent increase on the price the firm initially charged to win a contract in July 2023.
Should the Minister of Transport and Public Works, Jacob Hara, approve the bid price adjustment, it is the poor heavily taxed Malawian that stands to be skinned and roasted.
Our independent investigations have established that the contracted firm has changed tune and is now demanding MK96,044,941,302.16 up from MK68,279,419,378.91 plus 15 percent additional cost, with technocrats in the ministry already pushing Hara to approve the increase even without the knowledge and approval from the Public Procurement and Disposal of Assets Authority (PPDA).
The final project cost, including contingency, VAT and PPDA ley is now Ninety-Six Billion, Two Hundred and Forty-Three Million, Four Hundred and Sixty-Nine Thousand, Six Hundred and Twelve Kwacha and Fifty Tambala. This final cost represents an additional cost of MK27, 765,521,923.25, which is forty percent (40%) increase in cost to the existing Contract Price of MK68, 279, 419, 378.91 hence requires the approval of the Public Procurement and Disposal of Assets Authority (PPDA).
Madalo Nyambose, who wrote the minister on behalf of her Principal Secretary (PS), attributed the increase in project cost to what s/he termed as two main factors.
Nyambose highlighted results of the soil investigation surveys for the existing railway alignment and the effects of cyclones Anna/Gombe and Freddy as being the reasons for the increase.
“The two factors have influenced major changes in designs for the earthworks and pavement layers, bridges and other drainage structures. Honourable Minister, the bidding process for the existing contract was based on Jica Study Report of 2012 for the rehabilitation of the Sena Railway Corridor in Malawi and Mozambique, which indicated the possibility of reusing the existing soil material for the earthworks with only the inclusion of one newly constructed pavement layer.
“Honourable Minister, the results of soil investigation surveys conducted under the project as a prerequisite to detailed engineering designs revealed that the existing soil material could not be reused as was stated in the Jica Study (2012). This necessitated use of significant volumes of borrow material for earthworks,” this is how the introductory part of the memorandum referenced No. RD/03/42 Date: 03rd September, 2023, reads.
Below is the whole memo:
CONTRAT NO. MTPW/IPDC/DORS/02/2021-2022: DESIGN, UPGRADING AND REHABILITATION OF THE RAILWAY SECTION BETWEEN MARKA AND BANGULA
SUBJECT: FINALISATION OF PROJECT SCOPE, DETAILED ENGINEERING DESIGNS AND COST
The Client, the Supervising Engineer and the contractor have agreed on the final project scope, detailed engineering designs and cost for the Marka-Bangula Railway Project following your directive on the same issued in a meeting on 31st July, 2023.
Honourable Minister, in addition to poor soil conditions, it was later agreed that Spoomet IS40 standards shold be adopted for project on earthworks following discussions between the engineer, the contractor and the client at the inception of the project, as the best practice and suited standard for the region for the track design at 20.5 tonne axle load. This improvement in reference standard meant that double pavement layers be used as opposed to a single layer as was informed by the JICA Study of 2012.
Honourable Minister, the soil investigation surveys also further revealed that pile foundations for bridge structures as was the case in the JICA Study of 2012 could not be practical; hence, change in designs for bridge structures foundation was adopted from pile to pad foundations with increase in cost.
Honourable Minister, Cyclones Anna/Gombe and Freddy increased the flood line on some sections of the railway alignment. This therefore required a corresponding increase in the formation height. The floods also necessitated the increase in number and size of drainage facilities in form of open drains. These changes too have come with a significant additional cost for the final detailed designs.
Honourable Minister, in addition to the design changes stated above, the final designs have incorporated minor additions to project scope in track layout with minor cost additions. The number loops lines have increased and the loop lengths also increased from 641m to 750m. A triangle for turning locomotives were made in order to enhance train operational safety and efficiency.
Honourable Minister,..it follows therefore that the following options are being assessed should a decision be made to maintain the project cost at MK68,279,419,378.91 plus 15% additional cost that is currently the maximum cost adjustment allowable to the Client, but subject to the approval of the Ministry of Finance:
- Scope reduction in project length whilst maintaining fully the detailed designs.
- Full implementation of the detailed designs on earthworks and pavement layers for the entire project length whilst implementing a meticulous mix of detailed designs and bid designs on bridges and box culverts for the entire length of the project.
- Meticulous mix of detailed designs and bid designs on earthworks and pavement layers, bridges and box culverts for the entire length of the project.
- Honourable Minister, should a decision be made to implement the project at the detailed design cost of MK96,044,941,302.16, the following issues should be noted:
- The new project cost is above Contracting Authority’s maximum allowable cost adjustment of MK68,279,419,378.91 plus 15% additional cost and will therefore require the approval of PPDA, which might take some months to be granted or not. Meanwhile, the project will therefore continue with full implementation of works as detailed designs, but the Supervising Engineer will be informed not allow the performance of works that surpasses the current Contract Price of MK68,279,419,378.91.
- Honourable Minister, you might have noted in the table above that the detailed designs cost of MK96,044,941,302.16 now includes contingency sums of MK6,697,430,098.34. The contingency amount has been provided to serve the following purpose:
- Contingency for variation of works in the current detailed designs due to unforeseeable site conditions.
- Allowance for the final detailed cost for Station Buildings, which are still at Preliminary Designs.
- Allowance for the design and construction of signaling and communication system that was not initially included, but is critical for safe and efficient operations of trains.
- Honourable Minister, you might have noted that the project items in the above table do not include Project Management and Capacity Building for the Employer. Effective monitoring of the project requires frequent travel to the project sites and availability of well-trained and knowledgeable human resource on the part of the Employer. The following proposal is therefore being made to address the situation:
- The Employer to develop an Annual Budget for your approval for the purposes of Project Monitoring and Capacity Development. The budget is to be funded through Railways Infrastructure Development Fund domiciled at Roads Fund Administration (RFA). The project monitoring component will, at minimum, include the purchase of two (2) project inspection vehicles.
- Honourable Minister, as you are aware that the project is currently facing price escalation challenges on materials and fuel largely due to devaluation of the kwacha, this submission also seeks your approval for the Client to commence with the process of effecting price adjustment on materials and fuel. This process will therefore increase the project cost further beyond either MK96,044,941,302.16 or MK68, 279, 419, 378.91, whichever it may be based on the decision made as requested above.
- Honourable Minister, this memorandum is submitted for your directive on the following:
- Project implementation at the estimated cost of MK96,044,941,302.16 or MK68, 279, 419, 378.91 plus 15% adjustment.
- Provision of Project Monitoring and Capacity Building funds from Roads Fund Administration.
- Incorporation of signaling and communication systems designs and construction under project contingency sums of MK6,697,430,098.34.
Minister Hara could not be immediately drawn to comment on the matter. However, we will make an effort to seek his comment on the matter.