Asiatic Group Holdings’ subsidiaries, Colben System and Colben Energy Holdings has begun arbitration proceedings against Phnom Penh Special Economic Zone Plc (PPSEZ) for a minimum of US$14.4 mil ($19.3 million) on Nov 19.
The arbitration has been referred to the Singapore International Arbitration Centre.
The case was made due to a dispute in connection with a power plant project in Cambodia.
According to Asiatic Group, PPSEZ breached a joint venture agreement (JVA) that was signed between Colben System and itself. The breach resulted in “substantial changes” in the power plant project’s operational and business model that were “detrimental” to the interests of the project.
Under the JVA, Colben System was tasked to build, and subsequently operate and maintain a heavy fuel oil fired power plant with an initial capacity of 15-megawatt within the Phnom Penh Special Economic Zone (SEZ).
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The plant, which was completed in 2008, was set up to provide a stable and reliable power source to companies located within the Zone.
According to the statement released by Asiatic Group on Nov 19, the PPSEZ allegedly instigated for revisions to the electricity tariffs, such that the Electricity Authority of Cambodia (EAC) on June 30, 2020, revised the rates that applied in the SEZ.
The EAC also allowed companies to opt for a supply of electricity from the national grid source without Asiatic Group’s power plant’s back-up feature.
The decision, according to Asiatic Group, would cause the Group to suffer anticipated losses in the revenue generated by the project.
Shares in Asiatic Group closed flat at 0.5 cent on Nov 19.