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Sembcorp Cogen aborts gasoil supply and storage contract with Hin Leong Trading

24 Apr 2020

Singaporean energy, marine and urban development group Sembcorp Industries Ltd on Wednesday (22 April) said its subsidiary Sembcorp Cogen Pte. Ltd. (Sembcorp Cogen) has terminated its gasoil supply and storage agreement (GSS Agreement) with Hin Leong Trading Pte Ltd (HLT).

Sembcorp explains that as part of its energy business, Sembcorp Cogen which holds an electricity generation licence from the Energy Market Authority of Singapore (EMA) is required to have enough gasoil reserves to last at least 60 days of operations. 

At least 30 days of the operational reserves must be located at Sembcorp Cogen’s generating premises or on a site approved by the EMA, it added. 

To fulfil the requirements set out in the licence, Sembcorp Cogen entered into the GSS Agreement with HLT in 2009.Pursuant to the GSS Agreement, Sembcorp Cogen purchased the required gasoil reserves from HLT. 

HLT also provided storage and management services for the gasoil reserves on behalf of Sembcorp Cogen. The carrying book value of the gasoil reserves stored with HLT as at December 31, 2019 was S$94 million, says the company. 

Sembcorp explains its decision to terminate the contract stems from recent news reports relating to HLT and the affidavit HLT filed to the Singapore High Court in order to protect the company’s own interests over the gasoil reserves. Sembcorp adds it has also notified EMA of the situation.

Related: Report: Hin Leong Trading appoints PwC as interim judicial manager
Related: Singapore’s Police Force commence investigations into Hin Leong Trading
Related: Report: Hin Leong Trading founder gave instructions to hide USD 800 million losses
Related: Singapore: Ocean Bunkering Services to discontinue marine fuel deliveries
Related: Hin Leong in debt restructuring exercise; Ocean Tankers a separate entity, says CEO
Related: Report: Hin Leong Trading finances under scrutiny, amid credit pull from two banks

 

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