ISLAMABAD: The Multilateral Investment Guarantee Agency (MIGA) has reportedly indicated a potential $500 million Trade Finance Guarantee Programme for Pakistan, following an upgrade of the country’s credit rating, according to well-informed sources in the Commerce Ministry.
Sources confirmed that MIGA has upgraded Pakistan’s credit rating within the agency. A high-level delegation will visit Pakistan from February 19-21, 2025, to hold discussions on the proposed Trade Finance Guarantee with various ministries.
The delegation is scheduled to meet with Dr. Kazim Niaz, Secretary of the Economic Affairs Division (EAD); Fakhray Alam Irfan, Secretary of the Ministry of Commerce; Jawad Paul, Secretary of the Ministry of Law and Justice; Raja Naeem Akbar, Secretary of the Ministry of National Food Security and Research; Waseem Ajmal Chaudhry, Secretary of the Ministry of Law and Justice; Nadeem Mehboob, Secretary of the Ministry of National Health Services, Regulations and Coordination (MoNHS); Mohyuddin Ahmad Wani, Secretary of the Ministry of Education; and Zarrar Hasham Khan, Secretary of the Ministry of Information Technology to discuss matters related to their respective ministries.
Move to settle arbitration award: PD, NTDC advised to talk to Star Hydro
According to sources, the issue of the Star Hydropower Project will also be discussed, as an arbitration award has already been delivered under the MIGA-covered Government of Pakistan (GoP) guarantee.
The Star Hydropower Project is a 147 MW run-of-the-river hydropower plant located 120 km northeast of Islamabad on the Kunhar River. The project is operating under a 30-year Build-Own-Operate-Transfer (BOOT) scheme. MIGA provides breach of contract protection to a South Korean equity investor in the project, KDS Hydro Pte Ltd (the guarantee holder), for its equity investment in Star Hydro Power Limited.
The Attorney General’s Office has advised Pakistan’s Power Division and the National Transmission and Dispatch Company (NTDC) to engage in negotiations with Star Hydro to resolve the arbitration award issue, in order to reduce the risk of the MIGA guarantee being called upon.
Following discussions at the Prime Minister’s Office and communications from the World Bank, which emphasized the urgency of resolving the matter, Pakistan is facing potential liability under the MIGA-covered GoP Guarantee for the Star Hydropower project.
The arbitration award, rendered in favor of Star Hydro, demands prompt payment from Pakistan within 21 days. Failure to comply could result in MIGA paying the Guarantee Holder, which would negatively impact Pakistan’s international obligations and investment climate.
MIGA has expressed readiness to assist Pakistan in reaching a negotiated settlement with Star Hydro to mitigate these risks.
Copyright Business Recorder, 2025
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