Total Malawi Limited Faces $4 Billion Demand for Breach of Contract

The Malawi government, through Attorney General Thabo Chakaka Nyirenda, has given Total Malawi Limited a 14-day ultimatum to pay $4 billion, plus 15% legal costs, for allegedly breaching a fuel supply contract.

The contract, signed in 2001 between Prima Fuels Limited and Total Malawi Limited, included a rebate agreement that entitled the government to 50% of the retail margin on every liter of fuel sold.

The demand letter, dated August 2, 2024, asserts that the contract remains valid and warns of legal action if payment is not made by the deadline.

“I have been instructed by the Government of Malawi to demand from you a the immediate payment of {US$4, 000, 000, 000.00} being a rebate on fuels in arrears equal to 50% of the retail margin on every liter of fuel drawn from filling stations in a month arising from the Agreement for the Supply of Fuel entered into between Prima Fuels Limited and Total Malawi Limited dated 1 December 2001,” Chakaka Nyirenda’s letter reads.

Although the government was not a direct party to the agreement, it claims to be a beneficiary of the arrangement.

The letter adds: “It is pertinent to mention that although the Government of Malawi was not a party to the said agreement, it was a direct beneficiary of the arrangement between Prima Fuels Limited and Total Limited Malawi.”

Prima Fuels Limited’s lawyer, Wapona Kita, notes that’ “the court case is currently stayed pending arbitration proceedings. Total Malawi Limited has yet to comment on the demand letter.”