RAM Ratings monitoring PPA developments at Cahya Mata Sarawak

Published on 19 May 2023.

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RAM Ratings is closely monitoring developments at Cahya Mata Sarawak Berhad (Cahya Mata or the Group) following recent announcement that its power purchase agreement (PPA) between its subsidiary, Cahya Mata Phosphates Industries Sdn Bhd (CMPI), and Syarikat SESCO Berhad (SESCO) was terminated by SESCO on 13 May 2023. This follows the emergency arbitrator’s rejection of a fresh injunction against SESCO on 9 May 2023. 

CMPI previously obtained an interim injunction restraining SESCO from terminating electricity supply until 31 January 2023. The injunction was granted in connection with arbitration proceedings initiated on 17 November 2022 involving the two parties, heard before the Director of the Asian International Arbitration Centre. The subject of the arbitration revolves around a dispute over the date of commencement of commercial operations by CMPI, a key indicator to determine the take-or-pay energy rates under the PPA. The Group has disclosed a contingent liability of RM266 mil.

Cahya Mata is of the view that the PPA remains in effect as the arbitration proceedings are still ongoing. Meanwhile, the Group is exploring other legal avenues to protect its rights. CMPI commenced legal action at the Kuching High Court on 10 May 2023 and was granted an interim injunction against SESCO from 16 May 2023 until 25 May 2023.

As it stands, SESCO continues to supply energy to CMPI for commissioning production. However, in the absence of a PPA, we will need to reassess CMPI’s cost structure and financial contributions to the Group going forward. Significant expected contributions from CMPI were anticipated to improve the Group’s financial profile and business diversity, and underpin our positive outlook on Cahya Mata’s long-term ratings (see table). We will provide updates as necessary.

Cahya Mata’s ratings


Analytical contacts
Ben Inn
(603) 3385 2510

Thong Mun Wai
(603) 3385 2522


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Ratings on Cahya Mata Sarawak Berhad