Pakistan Observer, Pakistan
Pakistan seeks amendment in ICSID’s order
By Ali Syed
1 November 2013
Islamabad—Pakistan has landed in hot waters following the provisional decision of ICSID (international court for settlement of investment disputes) announced on October 16 which says that government of Pakistan should allow the Karkey’s vessel based power generation unit to move from Karachi port, as Supreme Court’s verdict is quite vivid that says that unless and until Karkey gives $ 128 million to Pakistan it cannot be allowed to leave the port, Pakistan Observer has learnt reliably.
A Turkish power generation company had filed a case some months back against the Pakistan government for compensation of losses worth 700 million dollars.
The case had been filed in the International Center for Settlement of Investment Disputes (ICSID) by KARKEY Karadeniz Elektrik Uretim for losses due to its vessels not being allowed to leave Karachi Port for almost 16 months.
The firm had leased a vessel based power generation unit to Pakistan in 2011 as a mean to alleviate the country’s dire electricity situation. But – due to intervention by the Supreme Court of Pakistan – the project was cancelled and charges of breach of contract laid on the Turkish concern.
The official said that the ministry of water and power is writing a letter to ICSID seeking the amendment in its provisional decision ensuring that Karkey brings back the vessel to Karachi port when the government of Pakistan desires as it has not so far paid the amount of $ 128 million. “We have hired UK-based BPL solicitors to fight the case of Pakistan.”
To a question, the official said for the first hearing at ICISD, Washington, BPL charged 70,000 ponds but the provisional decision came in favour of Karkey which has directed Pakistan allowing Karkey’s vessel of power generation unit to leave Karachi port.
It is also interesting to note that NAB and Ministry of Water and Power each has issued NoC allowing the Kareky to move its vessel from the port despite the clear directives of the Supreme Court that says that Karkey cannot move its vessel unless it pays $ 128 million to Pakistan.
The Karkey has also filed the case against Pakistan in London Court of International Arbitration for which the legal penalty has not yet been finalized, the top official said. The KARKEY rental power project also is remembered as one of the most controversial project and part of the well known RPPs (Rental Power Project) controversy.
It may not be out of place to mention that Supreme Court has taken the suo motu proceedings against all RPPs starting from 2006 onwards including Karkey plant. The Court - in its judgment on March 30, 2012 - declared all RPP deals as void. The SC also authorized NAB to take actions against all RPPs.
The NAB inquiry uncovered the fact that a deal had been struck under which Karkey would reimburse $ 17.5 million to Pakistan – but the Supreme Court insisted on recovering $ 128 million from the Karkey power plant. Therefore, as under the Bilateral Investment Treaty (BIT) executed between Turkey and Pakistan, Karkey served a notice on government of Pakistan for breaching of BIT on May 19, 2012.