Mota Engil - the favoured govt contractor is making losses on the M1

Mota Engil Construction Company the constructor government favours for most major projects in the country has disclosed that it has incurred huge losses in the construction of the M1 Lilongwe-Nsipe Road because of persistent interruptions and delays caused by the fuel shortages affecting the country.

The company has since engaged the government and the European Union (EU), as co-financiers of the project, to explore how it could be compensated for the loss.

The construction of the 162 kilometres road project, whose construction started on 30 May 2008 and was due for completion in November 2009 is three years late.

The cost of the project has since been revised by over 100 percent to K4 billion (Euro 18.7 million) from about K2 billion (Euro 9.5 million) as initially budgeted for.

The road is now set for completion in December 2012.

Many road projects in the country are stalling and have since not been completed and are unlikely to complet this year unless there is improvement on the forex and fuel situation.

Meanwhile, the Roads Authority has said that more contractors engaged by the government for various road projects around the country are seeking compensation for losses incurred on their projects.

Mota Engil which built Bingu wa Mutharika's mansion in Thyolo as a gift, said lawyers representing the company are already discussing with the government and the EU to establish whether the company should be compensated or how the parties could share responsibility for the expenses.

On the future of the project, Sheikh of Mota Engil said apart from outcomes of the discussions with the government and the EU, the company would prefer to be given a licence for direct importation of fuel for its use.

"We are [currently] not allowed to import fuel," said Sheikh.

Roads Authority Director of Construction Ben Kapoteza told the Business Times that a number of contractors have applied for compensations for losses on their project and the government was currently assessing the costs.

"All the [road] projects have been affected by the fuel shortage," said Kapoteza.

Meanwhile, the government has amended the fuel importation regulation and has now started providing direct import licences to large consumers

Mota Engil, which is said to be using about 6,000 litres a day, is yet to be given the licence to fill its 84,000 litres reservoir as applied.

According to Kapoteza, once the companies are given the fuel importation licences, the responsibility of the fuel availability will be transferred to them, hence sparing the government from incurring expenses such as compensations.

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