CMS reassures that the counterclaim by Sesco would not cause any material financial impact on its financials and operations.
KUCHING (Jan 6): Cahya Mata Sarawak Bhd’s (Cahya Mata) subsidiary Cahya Mata Phosphates Industries Sdn Bhd (CMPI), is facing a RM342.25 million counterclaim from Syarikat Sesco Bhd (Sesco) amid their ongoing arbitration proceedings concerning a purchase power agreement (PPA) dispute.
According to a report from The Edge, Cahya Mata has stated that Sesco’s counterclaim is outlined in its memorial, which presents facts and evidence supporting its claims.
“The evidentiary hearing has been fixed on Aug 26 to 30, before the arbitral tribunal,” said Cahya Mata in a bourse filing on Friday.
However, Cahya Mata reassures that the counterclaim by Sesco would not cause any material financial impact on its financials and operations.
The dispute between CMPI and Sesco originates from a PPA dated Jan 15, 2019 pertaining to CMPI’s phosphate plant.
Under the agreement, CMPI was obligated to take an electric supply capacity based on the computation in the PPA upon the commencement of commercial operations or pay for any electricity consumption shortfall.
The conflict arose when Sesco billed the group for a cumulative electricity consumption shortfall and payment security shortfall of RM266 million as of the end of December last year. Cahya Mata argued that the plant had not commenced commercial operations.
This disagreement led to the matter being referred to the Asian International Arbitration Centre under the dispute resolution mechanism of the PPA.
In July last year, the power supply to CMPI’s phosphate production plants was disconnected following the Court of Appeal’s dismissal of CMPI’s preservation order application.
Sesco subsequently terminated the PPA, citing an alleged breach by CMPI, effective from May 11, 2023.
Cahya Mata’s shares closed 2.65 per cent higher at RM1.16, resulting in a market capitalisation of RM1.25 billion.