KUALA LUMPUR (June 16): Cahaya Mata Sarawak Bhd (CMS) has failed to secure a court injunction to restrain Syarikat Sesco Bhd (Sesco) from terminating electricity supply to its phosphate production facility in Sarawak, in its ongoing dispute with Sesco over a power purchase agreement inked between them in 2019 that has been referred to arbitration.

CMS' phosphate production is housed under its subsidiary Cahya Mata Phosphates Industries Sdn Bhd (Phosphates), formerly known as Malaysian Phosphate Additives (Sarawak) Sdn Bhd.

"The ruling by the Kuching High Court may have implications for Phosphates' operations. If a power shutdown occurs, it will halt all activities at the plant. Since we have not yet begun commercial production, the financial effects on the group will be limited to monthly expenses and operational costs incurred while the plant is not running," said CMS in a bourse filing.

CMS said its top management will continue to assert the group's claims through arbitration proceedings as well as to explore all other possible legal recourse to protect its rights.

According to CMS, Phosphates referred the dispute with Sesco under the PPA dated Jan 15, 2019 to the Asian International Arbitration Centre under the PPA's dispute resolution mechanism last November. The Kuching High Court then fixed Friday (June 16) for the ruling on the inter partes (between parties) injunction sought by Phosphate, which it has now dismissed.

Last month, Sesco issued a default notice to Phosphates that the PPA was deemed terminated and that the termination of electricity supply to its phosphate complex at Samalaju Industrial Park, Sarawak would take effect on May 13. 

CMS had previously disclosed a RM266 million contingent liability in its audited financial statements for the financial year ended Dec 31, 2022 (FY2022) in relation to the PPA dispute.

CMS shares closed four sen or 3.77% lower at RM1.02 on Friday, giving it a market capitalisation of RM1.1 billion.