KUALA LUMPUR: The Sabah-based operations of Petronas Gas Bhd (PetGas) and Tenaga Nasional Bhd (TNB) are seeking arbitration in a dispute related to their 2012 power purchase agreement (PPA), with both seeking claims of more than RM80mil against each other.
In a filing with Bursa Malaysia, PetGas said Kimanis Power Sdn Bhd (KPSB), which operates the Kimanis Power Plant in Lahad Datu, had on March 24 issued a notice of arbitration against its main customer, TNB’s 80%-owned subsidiary Sabah Electricity Sdn Bhd (SESB), in connection with disputes arising from the PPA.
Kimanis is 60% owned by PGas and 40% by Yayasan Sabah’s subsidiary NRG Consortium (Sabah) Sdn Bhd. Although the PetGas group has the majority stake in Kimanis Power, it does not have control over it because strategic and financial decisions require unanimous consent by both shareholders.
PetGas said KPSB estimated its claims in the arbitration to be RM82.85mil, with PetGas’ 60% share being RM49.71mil, resulting from costs incurred by KPSB due to, among others, “SESB’s delays and/or other breaches arising from and/or in connection with the PPA.”
It argued that this was “part of KPSB’s efforts to protect and preserve its rights and monetary claims in respect of KPSB’s rights and obligations accorded under the PPA.”
Subsequently, SESB replied on a possible counter claim amounting to about RM124.08mil (RM74.45mil being PetGas’s 60% share asset in KPSB), being liquidated damages entitled to it pursuant to the terms of the PPA.
PetGas did not elaborate what “the delays” referred to and how long the delays were.
However, it was reported that the Kimanis plant was initially scheduled to start operation by end of 2013 but only began full commercial operation towards the end of 2014.
PetGas has made no provision on the possible contingencies in its financial statements up to the latest reporting date to Bursa Malaysia.
“The board is of the view that the arbitration will not have any material impact on the operations and financial position of the PetGas group for the current financial year ending Dec 31, 2017,” it said.
There has been no announcement to the exchange by TNB so far on its counter claim.
On Monday, the utility firm however announced the withdrawal of the judicial review proceedings against the Energy Commission, the Energy, Green Technology and Water Minister and YTL Power Generation Sdn Bhd. – First published in Business News – Star Online