Karkey's liabilities: $1.5 million grant to be approved by ECC today

The Economic Coordination Committee (ECC) of the Cabinet which is scheduled to meet on Wednesday (today) will approve $ 1.5 million supplementary grant for Power Division to clear liabilities with respect to M/s Karkey rental power plant, well informed sources told Business Recorder.
Previously, the ECC had approved the proposal with the direction that this amount should be arranged by the Power Division from its own savings, however, now the ECC is being informed that the concerned Division does not have sufficient funds.
GoP of Pakistan and M/s Karkey reached at an amicable agreement which was signed in Istanbul as Pakistan's team, comprising officials of Power Division, Attorney General Office and prime intelligence agency made hectic efforts to identify wrongdoings of the Turkish Power Company. Both parties have submitted their relevant documents of settlement to the ICSID.
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 the 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.