Wapda to pay $98 million to GBHP contractors

The Water and Power Development Authority (Wapda) has agreed to pay $98 million to Ghazi Brotha Contractors (GBC), including the Italian firm, Impreglio, by August 9 after which both the parties will withdraw cases against each other, official sources told Business Recorder.
Wapda and GBC were at odds with each other over the settlement of latter's claims and refusal to come back on the project after the September 11 incident citing security reasons.
Contractors were demanding $450 million in addition to approximately $76 million already collected by them, besides other disputed amount of over $250 million on top of the contract price of $511.76 million, sources added.
Wapda, sources said, also raised a claim of $9 million for international arbitration and proposed to take up the case of another $10 million on the same account.
According to these sources, contractors did not follow the dispute resolution procedure provided in the contract and approached the International Centre for Settlement of Disputes (ICSID).
However, they lost the case there on the basis that contracts were concluded with Wapda and not with the government of Pakistan.
They said, ICSID tribunal also declined to take up the matter under the Bilateral Investment Treaty (BIT), saying the agreement does not fall within the treaty.
The decision of ICSID had weighed heavily in bringing down the demand of GBC and fortified the negotiating position of Pakistan.
The matter was negotiated between Wapda and GBC out of court. The two parties have now negotiated a global settlement of all claims and disputes: past, present and future arising out of the Ghazi Brotha Hydropower Project (GBHP).
According to understanding between Wapda and contractors, the former will pay to GBC $98 million, net of 6 percent withholding tax by August 9 on standard terms, and all claims by each party will stand withdrawn, sources maintained.
The water and power ministry took up the matter in the economic co-ordination committee (ECC) of the cabinet, wherein, Wapda proposed to make payments after obtaining funds from the government through PSDP.
Sources said the federal government would provide funds to Wapda as rupee loan to make payment to contractors.
When some of the ECC members raised the question if the payment was being made for the work or otherwise, ministries of finance, water & power and Wapda assured that the amount being paid to GBC was on account of their legitimate claims and for the work done by them.