Cahya Mata Trading Suspended On SESCO’s Power Supply Termination To Phosphates’

Cahya Mata Sarawak has updated the power purchase agreement between Syarikat SESCO Berhad and Cahya Mata Phosphates Industries Sdn. Bhd (formerly known as Malaysia Phosphate Additives Sarawak Sdn. Bhd.) which has now resulted in SESCO cutting power supply effective May 13 2023.

Cahya referred to 25 November 2022, 1 December 2022, and 10 May 2023, updating the development that transpired between its subsidiary company, Cahya Mata Phosphates Industries Sdn. Bhd (formerly known as Malaysia Phosphate Additives Sarawak Sdn. Bhd.) and Syarikat SESCO Berhad. The group said that Phosphates had already referred a dispute under the power purchase agreement dated 15 January 2019 to the Asian International Arbitration Centre under the dispute resolution mechanism of the PPA.

However, as a result of the Emergency Arbitrator’s refusal to grant interim measures, Phosphates had commenced a legal action in the Kuching High Court on 10 May 2023 to seek an injunction to restrain SESCO from proceeding with the aforesaid actions. On 11 May 2023, SESCO issued a default notice to put Phosphates on notice that the PPA was deemed terminated and that the termination of electricity supply to Phosphates’ phosphate complex at Samalaju Industrial Park, Sarawak would take effect on 13 May 2023. On 13 May 2023 SESCO informed Phosphates that it would not proceed with the supply disconnection, subject to further advise from SESCO. Also on 13 May 2023, SESCO issued a letter affirming their purported termination with effect from 13 May 2023 at 12:00 p.m.

The management of Cahya Mata said it vehemently disputes the alleged termination and maintain that the PPA is still on foot. They are continuing to assert their claims through arbitration proceedings and explore all other possible legal recourse to protect all its rights.

Cahya Mata warns the termination of the PPA and electricity supply could have a possible impact on the Phosphates business operations and Cahya Mata Group’s financial performance. Potentially a  possible impact reflected in Cahya Mata’s FY2022 audited financial statements is a contingent liability of RM266,000,000 related to the PPA which has been disclosed.

The final details of the potential impact are yet to be determined as legal and arbitration proceedings are continuing and on-going, and Cahya Mata will provide further updates as new information becomes available.

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