KUALA LUMPUR (Jan 5): Cahya Mata Sarawak Bhd (CMS) said its subsidiary has been hit with a RM342.25 million counterclaim from state utility firm Syarikat Sesco Bhd in the pair’s arbitration proceedings over a purchase power agreement (PPA) dispute.
CMS said the counterclaim against the group's 79.07%-owned subsidiary, Cahya Mata Phosphates Industries Sdn Bhd (CMPI), was made in Sesco’s memorial (presentation of facts and evidence to support its claims).
“The evidentiary hearing has been fixed on Aug 26 to Aug 30, before the arbitral tribunal,” CMS said in a bourse filing on Friday.
The group said the counterclaim by Sesco would not cause any material financial impact on its financials and operations.
CMPI and Sesco have been embroiled in arbitration over a dispute relating to the PPA dated Jan 15, 2019 for CMPI's phosphate plant, since 2022.
Under the PPA, CMPI was required to take an electric supply capacity based on the computation in the PPA upon commencement of commercial operations of the phosphate plant, or pay for the electricity consumption shortfall.
The disagreement began when Sesco billed the group for cumulative electricity consumption shortfall and payment security shortfall amounting to RM266 million as at end-December last year, despite Cahya Mata contending that the plant is not deemed to have commenced commercial operations.
The dispute was referred to the Asian International Arbitration Centre under the dispute resolution mechanism of the PPA.
In July last year, power supply to the phosphate production plants of CMPI was cut off after the Court of Appeal dismissed CMPI’s application for a preservation order.
Sesco had deemed the PPA to be terminated with effect from May 11, 2023, due to the alleged breach of the agreement by CMPI.
Shares in CMS ended three sen or 2.65% higher at RM1.16, giving the group a market capitalisation of RM1.25 billion.
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