Mega First wins lawsuit against Sabah Electricity

PETALING JAYA: Mega First Corp Bhd has won a lawsuit against Sabah Electricity Sdn Bhd with the final award amounting to RM28.79 million.

In a filing with the stock exchange yesterday, Mega First said the Arbitral Tribunal had on Sept 28 awarded to its subsidiary Serudong Power Sdn Bhd; the principal shortfall of RM19.24 million in energy payment (EP) and capacity payment (CP) for the period of Nov 15, 2007 to Dec 1, 2016; interest on the shortfall in EP and CP of RM9.14 million calculated up to May 31, 2018; as well as Serudong Power’s representation cost of RM420,000.

Mega First noted that the final award will increase its earnings per share and net assets per share of 2.86 sen each for the financial year ending De 31, 2018.

The group added that the combined amount of RM28.37 million arising from the principal shortfall and interest on the shortfall had been recognised in its consolidated income statement for the sixmonth period ended June 30, 2018 announced on Aug 28, 2018.

“The above will result in a marginal improvement in the group’s gearing. However, it is not expected to have any effect on Mega First’s share capital and substantial shareholders’ shareholdings.”

To recap, Serudong Power is the owner of an electricity generating facility in Tawau, Sabah. Pursuant to a power purchase agreement dated April 13, 1995 between Serudong Power and Lembaga Letrik Sabah (currently known as Sabah Electricity), Sabah Electricity was to purchase from Serudong Power the generating capacity and electric energy generated by its facility.

The arbitration proceedings are in relation to the recovery of outstanding EP and CP due to the adjustment of the fixed operating rate and variable operating rate for the period of Dec 2000 to November 2013 together with interests thereon.

In April 2016, Serudong Power was given a partial award by the Kuala Lumpur Regional Centre for Arbitration Rules declaring that Sabah Electricity must pay RM7.75 million to Serudong Power.

Mega First’s share price rose 5 sen or 1.5% to close at RM3.45 on 57,300 shares done.