ISLAMABAD, Nov 25: The government’s efforts for an out-of-court settlement with the Turkish contractor for the multi- billion-rupee Islamabad-Peshawar Motorway proved futile and Pakistan will now have to defend itself in the International Centre for Settlement of Investment Disputes.

Pakistan had approached the Turkish government to bring one of its company, Bayinder, on the negotiating table. The company was “expelled” on charges of delaying the project.

Federal minister for communications Ahmad Ali had negotiated with Turkish authorities but but nothing positive had been achieved in this regard.

An official, privy to talks, said that both Pakistan and Turkish contractors, stuck to their stated positions.

Pakistan wants to encash $96 million bank guarantees that the Turkish company had given at the time of winning the contract for the project in question, whereas Bayinder is demanding about $200 million from Pakistan for alleged breach of contract.

The government’s efforts to encash bank guarantees have been thwarted by Turkish courts which have issued prohibitory injunctions.

The Turkish contractor, soon after its expulsion from the project, approached the International Centre for Settlement of Investment Disputes, alleging that the Pakistani action was a violation of the bilateral investment treaty between Pakistan and Turkey.

The sources said that ICSID, which had delayed the registration of the complaint, has now informally told parties concerned that it would register the Turkish company’s complaint.

Officials, who have the experience of conducting ICSID proceedings, say that once a complaint is formally registered at ICSID, the government will have to arrange a couple of million dollars to plead its case before the forum.

The ICSID works under the umbrella of World Bank, and there is no precedent that any country made a party to a dispute at ICSD could avoid appearing there.

The 156-kilometre-long road called Motorway One, shows how Pakistan’s government machinery works.

The project was started in 1993 with an estimated cost of Rs16 billion, has already consumed more than Rs40 billion, with half of the money coming out of the national exchequer, but there is still no road.

The Turkish contractor was expelled by the then military government on May 7, 2001, contending that it had failed to complete two sections of M-1 by March 23, 2001 as required under the agreement.

Experts, monitoring the project, are apprehending that the final bill for the project might now touch 50-billion-rupee mark, costing over a billion rupees for every three kilometre of the road.

The idea behind the expulsion of the contractor was to complete the project quickly and save the money. Both the objectives remained unachieved as the NHA has awarded the contract to a local contractor to complete it within four years, subject to availability of funds with the government.