The parleys between Government of Pakistan and Turkish firm M/s Karkey Uriterium to resolve rental power plant's issue for an out of court settlement remain deadlocked, well informed sources told Business Recorder. Former Prime Ministers, Nawaz Sharif, Shahid Khaqan Abbasi and incumbent Prime Minister raised this issue with the Turkish government at the highest level to sort out this issue but their efforts have not borne any fruit.
The sources said an inquiry panel comprising officials from prime intelligence agency and officials from Power Division has undertaken at least 8 visits to Turkey to reach an "out of court" settlement of the dispute. According to sources, M/s Karkey Uriterium insists that the Government of Pakistan should pay the awarded amount, around $ 1 billion, and is unwilling to accept any other settlement.
Pakistan argues that the firm could recover the amount by selling the power ships as it was ready to pay $ 17 million to NAB in 2013. The sources said, Finance Ministry has released $ 50 million to the Power Division to open an escrow account on the demand of M/s Karkey. M/s Karkey, a Turkish Power Company, set up a 232 MW ship-mounted rental power project pursuant to Rental Power Policy 2008, announced by the Government of Pakistan (GoP). M/s Karkey entered into Rental Services Contact (RSC) on April 23, 2009 for generation of electric power with the Lakhra Power Generation Company Limited (LPGCL). M/s Karkey achieved commercial operations in April 2011.
Supreme Court in exercise of its original jurisdiction initiated suo motu proceedings against the rental power projects 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 the National Accountability Bureau (NAB) to carry out an investigation under the NAB Ordinance 1999. NAB commenced investigation and placed caution on M/s Karkey ships restraining them from leaving the territorial water of Pakistan. M/s Karkey filed an arbitration claim against the GoP under Pakistan- Turkey Bilateral Investment Treaty (BIT), 1995, for various 'breeches', unilateral termination of the RSC and detention of its ships before the International Centre for Settlement of Investment (ICSID).
On August 22, 2018, the ICSID awarded against GoP 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. The GoP has filed an application to resist the recognition and enforcement of award. Further, various initiatives/remedies including revision, review etc., have commenced to resist the award.
According to sources, in the revision proceedings against the award, the ICSID tribunal decided, on the request for an extension of stay order on the enforcement of award, to extend the stay of the enforcement of the award until April 30, 2019, conditional on Pakistan providing by the same date a partial security payment of award in the amount of $ 50 million to be deposited in an escrow account.
Power Division conveyed to the government that if the partial security is not constituted on April 30, 2019, the stay shall be lifted ipso facto (by the fact itself). They further decided that if the partial security is constituted, the stay of the enforcement of the award shall be further extended until the tribunal decides on the admissibility of the revision. Subsequent to the meeting with the then Finance Minister, it was decided that such arrangement be done in the State Bank of Pakistan instead of any other foreign or local banks. This point of view was later confirmed by the Advisor to the Prime Minister on Finance. GoP's counsels proposed the same mechanism to ICSID tribunal on May 1, 2019.
The sources said Pakistan has got an extension till June 30, 2019 to deposit the amount of $ 50 million of which $ 5 million is meant to open the escrow account.
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