AfricaPress-Mozambique: Mozambique’s Confederation of Economic Associations of Mozambique (CTA), the country’s main employers’ association, on Wednesday suggested that, to avoid a protracted “legal war”, problems between the oil company Total and Mozambican companies be resolved through arbitration locally.
“We would prefer local arbitration, to avoid some of these cases, due to exhaustion, becoming legal battles,” Simone Santi, chairman of the CTA’s Natural Resources and Energy department, told journalists in Maputo.
“We have to avoid this becoming a legal war where, obviously, small and medium-sized companies may be swallowed up”, taking into account that “most cases could be resolved through negotiation”, Santi added.
At issue is the suspension of the Cabo Delgado gas project, the largest private investment underway in Africa, and the resulting losses for local companies supplying goods and services, which have made investments and taken out loans to purchase goods.
The CTA says that 28 Mozambican supply companies responding to a survey by the confederation have late payments due from TotalEnergies or its contractors. The association acknowledges that it expected to have around 40, but several firms did not provide information.
The 28 claimants said they had signed contracts totalling US$115 million (€94.87 million), mostly related to civil construction works, construction materials and health and safety.
Of the aforementioned amount, “US$38 million (€31.34 million ) already had purchase orders issued, US$20 million (€16.50 million) has already been paid, and US$18 million (€14.85 million) remains in the form of debt,” deputy chairman of the Natural Resources and Energy department at the CTA Gulamo Aboobakar reports
TotalEnergies has not yet commented on the US$43.6 million (€35.96 million) of “imported or purchased goods, which are in storage, and others that have been ordered and/or produced,” he added.
“It’s a situation which is still unresolved” and the amount remains “under discussion,” Aboobakar said.
The total amounts in dispute may be higher, as there are more Mozambican SMEs involved in the gas project.
The suspension of the project came after the March 24 attack on the town of Palma, the district headquarters less than ten kilometres from the Afungi site, and due to a lack of security in the region, which has been targeted by armed insurgent groups for three years.
The CTA also urged the French oil major and its subcontractors to jointly clarify to Mozambican small and medium enterprises (SMEs) the status of the contracts and issue a direct communication to creditor banks to “minimise their pressure on SMEs” – pressure which Simone Santi said was “suffocating” the companies.
“SMEs are not sure whether their contracts are suspended or terminated,” he said, adding that TotalEnergies had asked for ten days to respond to CTA’s proposal.
According to the Zitamar website, in response to written questions at the last general meeting, in May, Total said that, in order to limit the impact of the force majeure decision under which it suspended the project, it had terminated 62 contracts related to its operations in the country, of which 45 were with companies registered in Mozambique.
