Fuel retailer Total Malawi is entangled in rebates arrears deal which could see the firm paying Malawi Government and a private company about $480 million (about K355.2 billion) through an arbitration process.
The pending arbitration process follows a September 11 2019 order granted by Judge Annabel Mtalimanja of the High Court of Malawi Commercial Division in case number 259 of 2019 commenced by Prima Fuels against Total Malawi and Total South Africa (SA) to secure payment of rebates due to the firm and Malawi Government.
In an e-mailed response from Pretoria, South Africa, lawyer representing Prima Fuels, Dixon Latham, said proceedings under the case have been suspended as per Section 6 of the Arbitration Act of Malawi.
He said: “In terms of clause 18 of the agreement, which forms the subject base of the litigation under the above case number, any dispute, controversy or claim arising out of or relating to the agreement or the breach termination or invalidity thereof shall be settled finally by arbitration.”
Prima Fuels, according to Latham, is arguing that its indebtedness is not in dispute as the Malawi Government recorded and confirmed the validity of the 2001 agreement which saw Total enjoy duty and tax waivers, storage facilities and the implementation of the Top Card system.
The parties have agreed to have the arbitration process held in South Africa, according to the lawyer.
Information The Nation has seen indicates that on December 1 2001, Total Malawi Limited and Prima Fuels entered into an agreement for the supply of fuel and fuel products to government which remains valid.
Under that agreement, government is expected to enjoy rebates of up to 50 percent in arrears equal to 50 percent of the retail margin on every litre of fuel drawn from Total facilities by government and payable by Total Malawi Limited through Prima Fuels.
Attorney General (AG) Kalekeni Kaphale, whose office is the chief legal adviser to the government, yesterday said he was aware of the issue, but referred us to Ministry of Information, Civic Education and Communications Technology.
But Minister of Information, Civic Education and Communications Technology Mark Botomani, when contacted yesterday, said his ministry will issue a statement on the development.
However, a Capital Hill source familiar with the matter, confided yesterday that government noted in its records that Total Malawi was not committing to the agreement.
The source said the AG wrote Prima Fuels inquiring whether it had made any payments to government under the agreement as the AG’s office did not have any information on the same.
“Basically, the Attorney General indicated in the letter that failure to make any or all remittances to the Malawi Government would be considered a breach,” said the source.
But the source indicated that the $480 million figure was a rough estimate because the computations would be done by Prima Fuels on behalf of the Malawi Government.
Total Malawi Limited managing director Salamata Ball yesterday said in compliance with the law, her company will not comment on a case that is under arbitration.
Total Malawi is one of the private oil marketing firms in Malawi.