Cahya Mata Sarawak Berhad has updated on the recent news with regards to its subsidiary and SESCO, in a statement to the media the group said that the Kuching High Court has, on Tuesday, 16 May 2023, granted an ex parte injunction to restrain SESCO from proceeding with the aforesaid action till 25 2023 which is fixed for inter parte hearing.
To recap, the subsidiary Cahya Mata Phosphates had referred a dispute under the power purchase agreement dated 15 January 2019 (“PPA”) to the Asian International Arbitration Centre (“AIAC”) under the dispute resolution mechanism of the PPA pertaining to a dispute on tariff type.
Previously, Cahya Mata Phosphates had signed a power purchase agreement dated 3 February 2016 with SESCO. This First Agreement was subsequently terminated and the parties mutually agreed to enter into a new PPA governing the sale and purchase of electric power for our phosphate production facility in Sarawak.
Due to unforeseen circumstances including the Covid-induced lockdown, Cahya said the completion and commissioning of its Phosphates’ plant experienced delays. Despite attempts to resolve the dispute, Cahya said SESCO remained adamant in charging Cahya Mata Phosphates a different-tiered tariff which is much higher than what is supposed to be under the present condition.
As a result of the emergency arbitrator’s refusal to grant interim measures, Cahya Mata Phosphates commenced a legal action in the Kuching High Court on 10 May 2023 to seek an injunction to restrain SESCO from terminating electricity supply to Cahya Mata Phosphates’ plant at Samalaju Park, Sarawak.
Despite ongoing legal proceedings, SESCO continued to deem the PPA to be terminated with effect on 11.05.2023 claiming allegations of breach by Cahya Mata Phosphates, notwithstanding that the legal proceedings are still live issues that are yet to be determined in arbitration. Cahya Mata Phosphates contends that the PPA is still subsisting between parties, hence the above injunction proceedings in the Kuching High Court to seek an order for preservation of the status quo being the performance of the PPA.
