A MALAKOFF Corporation subsidiary, Tanjung Bin Power Sdn Bhd, has signed an agreement with parties involved in a litigation and arbitration procedure related to a power station consisting of three 700MW coal-fired units owned and operated by it.

The parties are IHI Corporation Japan, ISHI Power Sdn Bhd and IHI Power Systems (M) Sdn Bhd, the litigation respondents and Sumitomo Corporation, Zelan Holdings (M) Sdn Bhd and Sumi-Power Malaysia Sdn Bhd, the arbitration respondents.

“These disputes are currently the subject matter of the litigation action and arbitration proceedings.”

“As a result of the aforementioned agreement, a consent judgment will be entered in the litigation action on a strictly without admission of liability basis, and Tanjung Bin as the claimant, will withdraw and discontinue the arbitration proceedings on the terms and conditions set out in the agreement,” said Malakoff in a filing to Bursa Malaysia today.

Malakoff said the agreement was expected to contribute positively to the group’s earnings and net assets for the financial year ending December 31, 2017.

On December 1, 2015, Tanjung Bin filed writs of summons and statement of claim against IHI, ISHI Power and IHI Power System seeking damage for breaches of the duty care of which they individually or collectively owed to Tanjung Bin. The total claims amounted to RM780 million.

This is with regard to 22 different boiler tube failure incidents at the Tanjung Bin power station and the inability of the power plant to meet certain required output conditions. 

IHI is the manufacturer and supplier of the equipment, parts and components for boiler and boiler system in the respect of the plant, while ISHI Power and IHI Power System provided services to Tanjung Bin, among other things, coal blending, maintenance and operations of the boiler and mills of the plant.

Meanwhile, the arbitration with Sumitomo, Zelan and Sumi-Power is in respect of loss and damage suffered by Tanjung Bin as the consequence of the respondents or their agents’ negligence under the engineering, procurement, construction and commissioning contract of the power station.

On November 23, 2016, Malakoff said the damage suffered by Tanjung Bin amounted to RM785 million.

At 2.50pm, Malakoff share price rose two sen to RM1.04. – Bernama, August 4, 2017.