Prai Power signs settlement with Sumitomo over defective rotor

Prai Power has withdrew its RM83.61 million or US$26.28 million claim in the arbitration proceedings against Sumitomo  arising from a defective rotor.

MMC Corporation Bhd's Prai Power alleged that Sumitomo Corporation of Japan breached the obligations under the contract by supplying a rotor that was defective in design, manufacture and/or supply which rotor was found damaged on Sept 11, 2006.

The parties signed an engineering, procurement, construction contract on Oct 12, 2000 where Sumitomo would design, engineer, manufacture, erect, install and commission the Prai power plant.

On Aug 16, 2011, Prai Power had filed a statement of claim against Sumitomo, where it sought RM83.61million. It had sought costs of the replacement of the rotor, the commercial losses arising from the reduction in capacity payments and other consequential losses.

MMC said that Prai Power, which owns the 350MW combined cycle gas turbine power plant in Prai, Penang, had signed a settlement agreement with its insurers Allianz General Insurance Company (Malaysia) Bhd, and Sumitomo.

The settlement agreement substantially set out the parties' agreement to resolve and settle in full the dispute in the arbitration proceedings on the terms and conditions of the settlement agreement.

"As a result of the settlement agreement, PPSB, as the claimant has agreed to withdraw its claim in the arbitration proceedings against Sumitomo," it said.

For more.