Kuala Lumpur: Cahya Mata Sarawak Bhd's (CMS) subsidiary has been hit with a RM342.25 million counterclaim from state utility firm Syarikat Sesco Bhd in the course of their arbitration proceedings over a purchase power agreement (PPA) dispute.
In a stock exchange filing today, CMS said that the counterclaim was made in Sesco's memorial (presentation of facts and evidence to support its claims) against the group's 79.07 per cent-owned subsidiary, Cahya Mata Phosphates Industries Sdn Bhd (CMPI).
Since 2022, CMPI and Sesco have been involved in arbitration proceedings concerning a disagreement concerning the PPA dated January 15, 2019 for CMPI's phosphate plant.
When the phosphate plant began to operate commercially, CMPI was required by the PPA to either take up an electric supply capacity based on the computation in the PPA or cover any shortfall in electricity consumption.
The dispute started when CMS argued that the plant is not considered to have started commercial operations, and Sesco billed the group for a cumulative electricity consumption and payment security shortfall totaling RM266 million as of December last year.
The PPA's dispute resolution mechanism was used to refer the dispute to the Asian International Arbitration Centre.
Power to CMPI's phosphate production plants was shut off in July of last year following the Court of Appeal's denial of CMPI's request for a preservation order.
As a result of CMPI's purported breach of the PPA, Sesco decided to terminate it effective May 11, 2023.
CMS said that there would be no financial impact on its operations or financials as a result of Sesco's counterclaim.
"The evidentiary hearing has been fixed for August 26 to August 30, before the arbitral tribunal," it said.
Shares of CMS closed three sen, or 2.65 per cent higher today at RM1.16, giving the group a market capitalisation of RM1.25 billion.