KARACHI: While the Turkey-based 232 MW rental power ship ‘Kaya Bey’, along with three other sister ships, stays anchored in the Arabian Sea off the cost of Karachi since April 2012, the saga of government’s dispute with the ship’s firm has taken a new turn.

On Jan 31, Karkey Karadeniz ElektrikUretim A.S (Karkey) — the Turkish energy firm — filed a claim at the World Bank’s international Centre for Investment Disputes (ICSID) seeking $2.1 billion damages against the government of Pakistan.

A statement by the company released this week said: “Karkey is seeking compensation from Pakistan for breach of its obligations under the bilateral investment treaty (BIT), breach of international law and defiance of ICSID provisional measures order, in connection with Karkey’s investment in a rental power project (RPP) in Karachi”.

Valerie Harrison of APCO Worldwide, who spoke for Karkey, responded on Wednesday to questions put up by Dawn through e-mail, stating that four of Karkey’s ships were detained in Pakistani waters, “and without any legitimate basis or justification, approximately $128 million has been demanded from Karkey, which Karkey does not owe Pakistan.

“The figure has recently been changed again and this time reduced to $86 million by the Sindh High Court. As a result, Karkey’s vessels have been detained in Pakistan since April 2012,” the communiqué said and added: “(It has) prevented (Karkey’s vessels) from being redeployed to other productive destinations, where countries in need have been asking and waiting for such power ships, causing Karkey enormous financial harm.”

Responsible officials in the Ministry of Water & Power did not take calls. Yet, people in the knowledge of things say that there is little doubt that Karkey was unable to supply the 232MW of power for which it won the competitive bid.

However, the reasons advanced by the parties do not coincide.

Karkey insists that it was starved of the fuel (furnace oil), an essential raw material for production of power, which was why it could not generate the contracted amount of power.

The dispute with Karkey has been a long drawn affair in which the Supreme Court and National Accountability Bureau (NAB), Ministry of Water and Power and people in the top position in Islamabad are said to have played important roles.

All of that cannot be incorporated in this write-up. Yet, discussion with some relevant people brought to light that at present, Pakistan stakes claims of $128 million on Karkey.

In response, the Turkish power ship has now submitted claim of $2.1bn in ICSID.

Interestingly, no one really knows how the parties have calculated the amount of claims and counter-claims.

And there are other questions: What happens if either party refuses to accept the ICSID judgement?

Ms Harrison’s reply to Dawn was: “Both parties are obligated to comply with the decision of the ICSID tribunal under international law.

In Pakistan’s case, non-compliance would result in the country being downgraded in its business environment credibility, especially for foreign investments.”

However, Pakistani officials had said that in an earlier claim lodged by Karkey, the ICSID tribunal in its Oct 16, 2013 order had rejected all claims of the power firm, merely allowing Kaya Bey to temporarily sail to Dubai for mandatory dry-docking (maintenance).

Many responsible people said that the Karkey case, if nothing else, keeps alive, what was believed to be one of the biggest scam of Rental Power Projects.

Karkey was one of the 12 rental power companies that were awarded contracts in 2009. The Supreme Court later scrapped all deals made by the government with RPPs set up since 2006 by declaring them illegal, non-transparent and invalid.

In reply to how the Turkish power house thinks the dispute could be settled, Karkey’s spokeswoman’s answered: “Karkey requests that Pakistani authorities comply with ICSID’s provisional measures, order and release the detained power ships.

“Karkey also seeks compensation for the substantial losses it has suffered since Pakistan defaulted on its contract,” she said, adding: “An amicable solution may reduce the damages Pakistan may face to pay.”