LAHORE: Three independent power producers (IPPs) — Orient Power, Saif Power and Sapphire Electric — have won their cases against the Sui Northern gas Pipelines Limited (SNGPL) in the London Court of International Arbitration (LCIA) for receiving payment of Rs800 million capacity charges due for the diversion of gas.

Another case that is currently under way in London deals with a much bigger amount of around Rs16 billion, sources in the power sector told Dawn on Wednesday.

They said that when the government withheld capacity payments from IPPs that were unable to run on full load due to payment default by the government, IPPs moved the court; the government requested IPPs to withdraw the case and go into arbitration.

Retired Justice Sair Ali, who was appointed with the mutual consent of IPPs and the Government of Pakistan (GoP), ruled in favour of IPPs. The decision only awarded the principal amount of Rs11bn and not the interest cost which had accumulated to Rs5bn (till the date of verdict, ie August 2015).

The government, however, took a stay order from a local court. The IPPs appealed in the LCIA to have the award enforced.

The terms of the agreement between IPPs and GoP stated that the losing party, which in this case is GoP, could only appeal in the LCIA after paying the winning party. GoP had not paid and was trying to contest the case. And if it also lost in the LCIA, it will have to pay the legal costs of the winning party which would amount to billions of rupees.

The sources said it was highly likely that the LCIA will also award the interest cost which means that GoP will have to dish out another Rs5bn on top of Rs11bn it has already lost in the first round, not to mention the interest of Rs80 million that is accruing every month since August 2015.

An informed source said the government should focus on resolving the issue and making fair payments rather than squandering billions of rupees of taxpayers’ money on a case that would surely end in defeat.

Published in Dawn, May 26th, 2016

Opinion

Are we failures?
27 Feb 2021

Are we failures?

Third World leaders emulated their erstwhile oppressors...
Rage of Caliban
27 Feb 2021

Rage of Caliban

Lawyers have shown that the fraternity abides by tribalistic values...
Combating pollution
26 Feb 2021

Combating pollution

Air quality is at hazardous levels, and a more robust policy response is needed.

Editorial

LoC ceasefire
Updated 27 Feb 2021

LoC ceasefire

THE Pakistan-India relationship is known for its complexity and bitterness, but there are times when surprises of a...
27 Feb 2021

Null and void

HAD people not lost their lives, the ham-fisted attempt at rigging the Daska by-election on Feb 19 could have been...
27 Feb 2021

Minister’s non-appearance

FEDERAL Water Resources Minister Faisal Vawda’s continued absence from the Election Commission’s hearing on the...
Terrorist’s escape
Updated 26 Feb 2021

Terrorist’s escape

It is not clear how many military personnel were involved in this incident and what the investigation into their actions revealed.
26 Feb 2021

Penalising filers

THE FBR has decided to penalise taxpayers filing their returns late. Apparently, these filers will be required to ...
26 Feb 2021

Corporal punishment

FOR a child born in our society, the cycle of violence begins early. The first taste of violence often comes at the...