Prime Minister, Imran Khan, in a tweet, has claimed that PTI government with the help of President Recep Tayyip Erdogan has amicably resolved the M/s Karkey dispute and saved $ 1.2 billion penalty imposed by ICSID.
Well-informed sources told Business Recorder that a four-member team constituted by the then Prime Minister Nawaz Sharif, comprising officials from Power Ministry, Attorney General's Office and ISI recently visited Turkey more than 10 times to get an out-of-court settlement with the Karkey Karadeniz Elektrik Uretim.
National Accountability Bureau (NAB) also arrested a 'front man', Laeeq Ahmed Sheikh, during investigation for corruption, 'corrupt' practices and misuse of authority in the award of RPP's contract to M/s Karkey.
According to sources, Pakistan hired a Swiss firm against the payment of a heavy fee which will help obtain proof of illegal transfer of the amount and present it in the court and the arrest of Laeeq Ahmed Sheikh will be used as leverage to get a "deal".
The sources further stated that during Shahid Khaqan Abbasi-led government, Power Division had also sought about $35 million for an out-of-court settlement but the then government delayed it saying "it will look into it" but did nothing.
The federal cabinet approved a supplementary grant of $ 1.37 million to contest cases filed by M/s Karkey in courts of different countries as Pakistan's assets abroad are facing "attachment" threat.
M/s Karkey had set up a 332 ship-mounted Rental Power Project (RPP) at Port Qasim, Karachi, pursuant to Rental Power Policy 2008, announced by the then government of Pakistan (GoP). M/s Karkey entered into Rental Services Contract (RSC) on April 23, 2009 for generation of electric power with the Lakhra Power Generation Company Limited (LPGCL). Pursuant to the terms of the RSC, the GoP issued a sovereign guarantee to secure payment obligations of LPGCL and Karkey achieved commercial operations in April 2011.
In the meanwhile, the Supreme Court in exercise of its original jurisdiction initiated suo motu proceedings against RPPs and through its detailed judgment of March 30, 2012, declared all RSCs void ab initio, being illegal and against public policy. The Supreme Court also directed National Accountability Bureau (NAB) to carry out investigation under the NAB Ordinance 1999.
The sources said that pursuant to the judgment of SC, NAB commenced investigation and placed caution on M/s Karkey ships, restraining them from leaving territorial waters of Pakistan. Meanwhile, M/s Karkey filed an arbitration claim against the GoP for various unilateral termination of the RSC and detention of its ships before the International Centre for Settlement of Investment Disputes (ICSID) under Pakistan-Turkey Bilateral Investment Treaty (BIT), 1995.
The proceedings before ICSID were held between March 23 and March 26, 2018. On August 22, 2018, the ICSID awarded against GoP an amount of $ 760 million along with interest thereupon. After the award, Karkey has gone into enforcement of arbitration award against Pakistan in various jurisdictions including the US, the UK, Germany and France.
Pakistan has already spent over one billion rupees on litigation with Turkish Company. No official from Power Division was not available to offer comments on Prime Minister's tweet.
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