Cambodia Securities Exchange- (CSX-) listed Phnom Penh Special Economic Zone Plc (PPSP) refuted Singapore-based Asiatic Group (Holdings) Ltd’s (AGH) allegations over breaching a power plant joint venture (JV) agreement.
Asiatic Group’s wholly-owned Colben System Pte Ltd and 95 per cent-owned Colben Energy Holdings (PPSEZ) Ltd (CEZH) on November 19 started arbitration proceedings that were referred to the Singapore International Arbitration Centre.
In a statement earlier this month, managing director Tan Boon Kheng of Singapore Exchange Ltd’s Catalist listed-Asiatic Group said the breach in the JV agreement resulted in substantial changes in the power plant’s operational and business model that were detrimental to the interests of the project.
Tan said the claim represents Colben’s and CEZH’s loss in value of their shareholding in Colben Energy (Cambodia) PPSEZ Ltd (CEZ) – the JV company with PPSP set up in 2006 – as a result of the anticipated losses in the JV company’s revenue.
AGH is seeking a minimum of $14.4 million relief from PPSP.
In a filing to the CSX on November 27, PPSP affirmed its associate relationship with Asiatic Group and noted that CEZ was granted exclusive rights to distribute and generate electricity in Phnom Penh Special Economic Zone (PPSEZ).
PPSP said it owns 23 per cent of CEZ while AGH owns 77 per cent of CEZ through Colben and CEZH.
AGH (through Colben and CEZH) alleges that PPSP instigated for revisions to the electricity tariffs, which was in breach of the JV agreement.
This resulted in a revision of tariff rates applied in the zone by regulator Electricity Authority of Cambodia (EAC) on June 30.
It allowed companies to opt for electricity supply from the national grid source without Asiatic Group’s power plant’s back-up feature.
AGH claims that it will suffer losses resulting from the EAC’s decision which PPSP is liable for.
PPSP fired back in the filing, saying it will “take all necessary steps to vigorously defend against these baseless claims.
“The EAC is an independent regulatory body which has directed several revisions of electricity tariffs in the past, consistent with [among others] Prakas No 40 dated 14 January 2020 issued by the Ministry of Mines and Energy which requires the implementation of the Plan for Reducing Pricing of selling electricity to consumers and plan or reforming Payment of Electricity Prices of Consumers for 2020 and 2021.
“PPSP does not have any control over the EAC’s decision … [and is] presently considering its options and will keep shareholders fully informed on its next steps over the coming weeks, insofar as this is consistent with its obligations of confidentiality in relation to the arbitration.”
In the third quarter of this year, the PPSP reported total revenue of 10,228,877,000 riel ($2.5 million), up 19.53 per cent year-on-year, and net income to the tune of 1,088,761,000 riel, up 134.86 per cent year-on-year, according to a financial report filed to the CSX.