Total ignores $4bn demand

 The Malawi Government has turned to the High Court in its $4 billion (over K7 trillion) claim from Total Malawi, now Total Energies, for breach of contract after the company failed to respond to Capital Hill’s demand letter within stipulated time.

Attorney General (AG) Thabo Chakaka-Nyirenda said this week that the Malawi Government is now preparing a lawsuit against TotalEnergies because the company has not responded to his demand letter of August 2 2024 to the firm’s headquarters in France seeking the said amount.

The claim relates to a rebate on fuels TotalEnergies was obliged to pay government, in accordance with a contract signed in 2001, but the company allegedly stopped honouring the payment in 2006.

The AG’s demand letter indicates that in 2001 the Malawi Government contracted Prima Fuels Limited to supply the country’s national fuel requirements.

But Prima Fuels sub-contracted TotalEnergies to supply fuel and fuel products whose contract was signed on December 1 2001.

Since then, according to the demand letter, Total has been supplying fuel to government under the contract, which is still in force.

According to the AG, as part of the agreement, Total was required to pay government a rebate in arrears equal to 50 percent of the retail margin on every litre of fuel drawn from filling stations in a month.

Further, Total was required to pay Prima Fuels Limited 50 percent of the gross margin on every litre Total Malawi imports.

However, the AG alleges in the letter that Total breached the provision by failing to pay government and Prima Fuels the rebates which have since accumulated to $4 billion for each of them.

The AG further demanded TotalEnergies to pay the amount together with interest and 15 percent legal collection costs within 14 days from August 2 2024.

But in an interview on Tuesday, both the AG and Prima Fuels Limited said they have not heard anything from TotalEnergies and they were taking the matter to court.

“We are proceeding with court action which was stayed earlier pending arbitration. Now that arbitration is out of the way for our client, we are taking the matter back to the High Court for trial,” said Wapona Kita who is representing Prima Fuels Limited.

TotalEnergies Malawi and the head office in South Africa had not responded to our inquiry about their position on the AG’s demand letter.

Kita said Prima Fuels has an irrevocable agreement as a supplier of fuel and fuel products to Malawi Government and is also suing Total for unpaid rebates arising from a contract entered into with

 them.“Under the contract, the Malawi Government was also entitled to its own rebates side by side with my client. That is why you now see the Attorney General is coming in to make their parallel demand because government is a beneficiary of the contract,” explained Kita.

Ministry of Justice spokesperson Frank Namangale said since they have not received any response from TotalEnergies as regards their stand on the matter and that the 14 days have expired, “we are proceeding with the legal suit to protect Malawi’s interest in the matter.”

Kita said they had already filed the application to court. ‘‘We are waiting for the court to give us a date.’’

But Namangale, who had promised to revert to us about when they are filing the application to court, had not done so by press time.

In a separate interview on Wednesday, Prima Fuels Limited managing director Joseph Mauri Swanepoel said the issue dates back to 2006 when the French fuel company stopped paying the royalties.

He said the contract was put out on tender by PricewaterhouseCoopers (PwC) on instruction of his firm and government to secure a better price for government’s fuel usage.

“Total started supplying fuel to government through the Topcard system, which had never been used by Total prior to this contract. Government also allowed Total usage of its storage facilities at a throughput rate, and also gave them discount on importation duties of equipment in order to increase the filling station network in Malawi,” explained Swanepoel.

He said at the time of signing the contract managing director of Total Malawi was Steven McGarvey, but when he was replaced, Total stopped paying the royalties.

“Prima Fuels wrote a letter of demand to Total in 2012, but after no satisfactory response from them, Prima Fuels started litigation in the High Court of Malawi in 2016, but the court referred our matter to the International Court for Arbitration,” he said