Malakoff settles dispute over Tanjung Bin power plant

PETALING JAYA: Malakoff Corp Bhd's 90%-owned subsidiary, Tanjung Bin Power Sdn Bhd (TBP) has signed an agreement with litigation and arbitration respondents to resolve and settle the disputes between the parties involving the 22 different boiler tube failure incidents at the power station consisting of three 700MW coal-fired units owned and operated by TBP and the inability of the plant to meet certain required output conditions.
"These disputes are currently the subject matter of the litigation action and arbitration proceedings. As a result of the agreement, a consent judgment will be entered in the litigation action on a strictly without admission of liability basis, and TBP as the claimant, will withdraw and discontinue the arbitration proceedings on the terms and conditions set out in the agreement," Malakoff said in a stock exchange filing.
The litigation respondents are IHI Corporation Japan, ISHI Power Sdn Bhd, and IHI Power Systems (M) Sdn Bhd (IPSM); while the arbitration respondents are Sumitomo Corporation, Zelan Holdings (M) Sdn Bhd and Sumi-Power Malaysia Sdn Bhd.
The signing of the agreement is expected to contribute positively to the earnings and net assets of MCB group for the financial year ending Dec 31, 2017.
TBP had on Dec 1, 2015 filed a writ summons and statement of claim against IHI ISHI and IPSM, seeking damages for breaches of the duty of care of which they individually and/or collectively owed to TBP. The breaches had led to at least 22 different boiler tube failure incidents at the plant and the inability of the plant to meet certain required output conditions.
The total claimed against defendants was estimated at RM780 million. The claims against the separate defendants are however made under separate heads and the amounts claimed vary.
TBP had also sought relief from the court for loss and damage arising from the breaches from IHI, ISHI and IPSM, which includes the costs of repair and replacement, and economic losses including in relation to available capacity payments and daily utilisation payments as well as interest and costs.
IHI is the manufacturer and supplier of the equipment, parts and components for boilers and boiler system in respect of the plant. ISHI and IPSM provided services to TBP for, among other things, coal blending, maintenance and operations of the boilers and mills of the plant.
At 2.32pm, Malakoff shares rose two sen to RM1.04 on some 3.52 million shares done, giving it a market capitalisation of RM5.2 billion.