This article first appeared in The Edge Financial Daily, on April 6, 2016.

KUALA LUMPUR: Kuala Lumpur Aviation Fuelling System Sdn Bhd (KAFS) is seeking an estimated RM456 million from Malaysia Airports Holdings Bhd (MAHB) for alleged losses and damages related to changes in the concession period under the Airport Facilities Agreement (AFA). The AFA gave KAFS the rights and authority to operate and maintain the aircraft fuelling system for a concession period of 50 years.

MAHB had announced on March 31 that its wholly owned subsidiary Malaysia Airports (Properties) Sdn Bhd (MA [Properties]) had received a notice of arbitration from KAFS regarding the matter on Feb 26. The AFA was dated Sept 26, 2007.

KAFS is 20%-owned by MA (Properties). Responsible for the management, operations, and maintenance of the fuel pipelines at Kuala Lumpur International Airport 2 (klia2), KAFS is a subsidiary of Petronas Dagangan Bhd, which holds a 65% stake in the company, with the remaining 15% stake held by Malaysia Airline System Bhd.

In a bourse filing yesterday, MAHB said the dispute between KAFS and MA (Properties) was in relation to an operating agreement (OA) entered into between MA (Properties) and the Malaysian government on Feb 12, 2009, which shortened the concession period to 25 years.

As a result, KAFS has alleged that MA (Properties) has breached the AFA by entering into the OA, the filing added.

Further, MAHB said the amount being sought by KAFS is still subject to KAFS’ comprehensive evaluation.

Notwithstanding that, MAHB said KAFS’ estimated claims represent approximately 5% of the net assets of the MAHB Group as at Dec 31, 2015, and therefore, is not expected to have a material financial impact on the MAHB Group.

“MAHB does not foresee that the alleged claim from KAFS will have any material impact on the operational position of MAHB. The solicitors for MAHB continue to have the opinion that MAHB has a good arguable case against KAFS in the arbitration,” it added.

MAHB also said numerous attempts have been made to amicably settle the disputes and differences, but they remain unresolved.

MAHB shares closed 3 sen or 0.45% higher at RM6.65 yesterday, for a market capitalisation of RM11.12 billion.