Kuala Lumpur Kepong Bhd (KLK) said its wholly owned Indonesian subsidiary, PT Perindustrian Sawit Synergi (PT PSS), is facing arbitration proceedings initiated by PT Pertagas Niaga over the termination of a gas supply agreement.
In a filing with Bursa Malaysia, KLK said PT PSS received a notice on July 3 confirming the formation of a panel of arbitrators under Indonesia’s Badan Arbitrase Nasional Indonesia (BANI). The arbitral hearing is scheduled to commence on July 10.
PT GN is seeking compensation of approximately US$39 million (about RM158.7 million) after deducting a bank guarantee, representing alleged take-or-pay obligations for the remaining tenure of the gas supply agreement.
The Indonesian gas supplier is also seeking a declaration that its drawdown of PT PSS’ US$2.78 million (approximately RM11.3 million) bank guarantee was valid.
KLK said PT PSS intends to vigorously contest the claims, maintaining that PT GN’s allegations are without merit.
The subsidiary will also file a counterclaim against PT GN, alleging a breach of the gas supply agreement arising from the supplier’s failure to provide continuous gas supply.
PT PSS is seeking damages estimated at around RM55 million, subject to further assessment, as well as a declaration that the drawdown of the bank guarantee was invalid and a refund of the amount claimed under the guarantee.
