KUALA LUMPUR (April 27): Malaysia Airports Holdings Bhd (MAHB) intends to resolve the arbitration with Kuala Lumpur Aviation Fuelling System Sdn Bhd (KAFS), which demands a claim of RM456 million from the airport operator, by year end, said its managing director Datuk Badlisham Ghazali.

The dispute arises from the shorter-than-expected tenure of the operating agreement (OA) that MAHB has entered into with the government. Consequently, the airport facilities agreement (AFA) between MAHB and KAFS has to be cut short to 25 years from 50 years.

Hence, KAFS is seeking RM456 million in claims for losses and damages pertaining to the change of concession period under the AFA.

Speaking to the media after MAHB's annual general meeting today, Badlisham said the board is in talks with the government to seek a longer tenure for the OA to operate Kuala Lumpur International Airport (KLIA). The current OA ends in 2034.

"We are desirous to extend the (concession) agreement beyond 2034," he said, adding that with the extension, MAHB would be able to extend the concession period for KAFS under the AFA as well.

Badlisham said MAHB has approached its vendors and suppliers, including KAFS, to shorten all the other AFAs, after the government restructured the OA in 2009.

"We have talked to all our vendors after the government restructured the OA so that they can follow suit and shorten our agreements with them (vendors), there is no issues with other vendors, except for KAFS, because they have already invested in the piping," he said.

Asked would MAHB pay the damage claimed by KAFS should the government maintain the OA period at 25 years, Badlisham merely said the group will look into other ways to resolve instead of going straight for compensation.

Nevertheless, Badlisham stressed that MAHB has a strong standing in the arbitration as it complied with all of the terms and conditions under the AFA.

To recap, MAHB had recently announced to Bursa Malaysia that its wholly-owned subsidiary Malaysia Airports (Properties) Sdn Bhd had received a notice of arbitration from KAFS arising out of the OA entered into between MAHB and the government.

KAFS is a subsidiary of Petronas Dagangan Bhd.