Peermont Global (Pty) Ltd, a South African company, says it is considering taking action against the Malawi government after the deal it was given by government to manage the multi-million USD complex comprising the Bingu International Conference Centre, The President Hotel and the Presidential Villas in Lilongwe had been cancelled.
When the Malawi government called for bidders to run the complex in the local media, Peermont and a number of other companies applied. Peermont was given the deal in February 2012 but pre-contract negotiations lasted for over a year and so when President Bingu wa Mutharika died in April 2012, the new President Joyce Banda ordered the Ministry of Tourism and Umodzi Holdings to renegotiate the deal with Peermont, a development which Peermont accepted.
Subsequently, President Banda decided to cancel the deal, leaving Peermont in a quandary. The company’s Group Public Relations Manager, Julie Van Wyk said no reasons have been given for the cancellation.
Trading as Emperors Palace, the company told Gateway to Africa: “We are currently quantifying our damages for the purpose of determining any future course of action”.
The Malawi government cancelled the deal at the point when discussions were almost over for Peermont to start working on the complex as managers and gave it to another South African company, Legacy Holdings Limited instead.
Umodzi Holdings Limited, which has been running the complex, advised government not to cancel the deal with Peermont Global Limited but to no avail.
Malawi’s Attorney General, Anthony Kamanga is of the view that stopping Peermont, which had almost finalised the process of signing a contract with government would cost taxpayer a lot of money in law suits. The Malawi government has not even communicated the cancellation of the deal let alone given reasons for its actions to Peermont.
“We were extremely disappointed to learn of the sudden withdrawal by the Malawi government from the negotiations on this particular transaction. Our disappointment was exacerbated by the fact that, to date, we have still not been given any reasons for this withdrawal from the negotiations,” said van Wyk.
She said her company had, “at all times, acted in the utmost good faith in all our dealings with representatives of the Malawian government, and have invested substantial time, effort and money in this project over a protracted period of time.”
But Minister of Tourism Rachel Zulu has defended the President’s actions saying that there was nothing wrong with the offer of a lease to Legacy to manage the complex. She said the Malawi government was ready to deal with any legal action against it should Peermont decide to go to court.
The Director of Finance and Administration in the Ministry of Tourism, Kenson Mbwana, has since written to the Legacy Group Holdings informing them that they have won the bid to manage the complex on lease basis.
The Malawi government is not clear about the cost of the complex but Director of Toursim Isaac Katopola told journalists last year that government had borrowed $95 million from the People’s Republic of China to build the complex under a loan agreement payable in 30 years.
Reports indicate that the Malawi government’s delay in signing the contract with Peermont has cost the tax payer MK700 million (USD2.2 million), as payment for items sourced from South Africa by Sunbird Hotels, which had managed the complex in the interim, because of the delays in opening the hotel.
This is not the first time that President Banda has cancelled a government contract. In December last year, President Banda pulled out of an agreement to purchase emergency medicines worth K890.7 million (USD2.7 million). However, State House has defended the president saying she has the powers to intervene if things are wrong.
