• ECC forms high-powered panel to seek settlement with APL
• Okays Rs24bn in supplementary grants for various ministries
ISLAMABAD: Faced with the prospect of international arbitration involving three foreign investors, including one linked to US President Donald Trump, the Economic Coordination Committee (ECC) on Tuesday constituted a high-powered committee to find an amicable settlement, amid concerns over a potential $250 million immediate investment and overall foreign investor confidence.
The ECC meeting, chaired by Finance Minister Muhammad Aurangzeb, also approved about eight supplementary grants totalling around Rs24 billion for various ministries.
The dispute centres on Asia Petroleum Limited (APL), which owns an 82-kilometre furnace oil pipeline from Port Qasim to the Hubco power plant. APL is owned by Pakistan State Oil (49 per cent) and three foreign firms (51pc): US-based VECO International Ltd (12.5pc), Singapore-based Infraavast Ltd (26pc) and Kuwait’s Indepndent Petroleum Group (12.5pc). Infraavast also holds a 45pc stake in Fauji Oil Terminal and Distribution Company (FOTCO).
Sources said APL Chairman Peter Leathard, who is associated to President Trump, has met cabinet members and other stakeholders, including Mr Aurangzeb, to protest what he termed a unilateral stoppage of payments for more than 15 months and to convey reluctance to go ahead with a proposed $250m mid-point oil port project at Hub and have threatened to pursue international arbitration, seeking costs and penalties.
Interestingly, the APL’s pipeline tariff and implementation agreement, which came into force in 1996, is set to expire by February 2027 in any case. The payments, both in case of termination of the agreement now or completion of the term, have been claimed at $32m, of which about $15.7m has to come back to PSO, being the largest shareholder.
After adjustments for taxes, net payables to three foreign investors come to about $13m over the next 13 months, even in the case of a normal payment schedule based on sovereign guarantees for the pipeline. The APL also had the right of way along the pipeline for the then visualised Saudi-Aramco refinery, which has not materialised so far.
A cabinet member, while talking to Dawn, did not agree that an agreement with foreign investors had been mishandled unnecessarily, but conceded that the dispute had emanated from poor judgement and oversight in the heat of negotiations with independent power producers (IPPs) and could have been avoided. “Twenty-nine years had already passed, the contract and the pipeline had worked well and one year with a nominal cost should not have become an issue,” he said.
The issue surfaced after the National Task Force on the power sector terminated contracts with five IPPs in October last year, including the Hubco plant, which had received furnace oil via the APL pipeline under the 1996 agreement backed by sovereign guarantees. The pipeline was originally designed to serve two IPPs, but only Hubco materialised, leaving it redundant from a contractual standpoint after the termination.
The task force, spearheaded by Zafar Iqbal, considered the APL pipeline’s utility at the time of termination of power purchase agreements and was told that it was a strategic project that could be dedicated to the planned Aramco refinery, along with additional infrastructure. A supply agreement with nearby Cnergyico Petroleum Limited (formerly Byco) was also proposed and APL was offered to come up with a project that could be joined by Pak-Arab Refinery and others.
However, Mr Iqbal ordered payments to APL to be stopped, prompting strong objections from the three foreign shareholders, who cited the continuing force of the agreement and sovereign guarantees. In resentment letters, they threatened not to go ahead with the additional port facility project worth $250m in foreign investment if the earlier investment agreement was not honoured.
Both the ministries of energy (petroleum) and law concluded, after reviewing the documentation, that a violation of the implementation agreement had already occurred and that unilateral termination or continued non-payment would be difficult to defend legally. A summary placed before the ECC outlined options, including full payment on termination or completion of the remaining term, or a negotiated settlement, noting that security and maintenance costs were continuing and that about 8,000 tonnes of furnace oil were currently in storage.
Most stakeholders warned that escalation into arbitration would send a bad signal for foreign investment and damage Pakistan’s credibility, particularly at a time when attracting external capital was a priority.
In a statement, the Ministry of Finance said the ECC had constituted a committee comprising representatives of the petroleum division, finance division, law and justice division, the Special Investment Facilitation Council (SIFC) and PSO, under the ambit of the National Task Force-Implementation of Reforms (power division). The committee has been tasked with formulating a way forward by Jan 31.
“The committee will negotiate the terms of the implementation agreement, including the guarantee agreement and letter of agreement, with APL and will also decide on the question of ownership of fuel and the alternative use of the pipeline,” it said.
Supplementary grants
Separately, the ECC approved supplementary grants including Rs7.081bn for the defence division — Rs2bn for the Sustainable Development Goals Achievement Programme in Punjab and Rs5.081bn for defence services covering capacity enhancement, infrastructure development, community engagement and cyber security.
The committee decided the amount would be released in phases and incorporated into the regular defence budget from the next financial year.
It also approved Rs322.87m for the Directorate General of Special Education to purchase 15 coasters for transporting special children enrolled at an Autism Centre of Excellence being set up in Islamabad, and an Rs800m grant for the IT and telecommunication division to establish an Asan Khidmat Centre in Islamabad.
The ECC cleared an additional Rs3.7bn for Public Sector Development Programme projects to strengthen digital connectivity, enhance IT infrastructure, promote e-governance and support the national ICT ecosystem.
It allowed Rs10bn for the Federal Board of Revenue to set up digital enforcement stations along the Indus, Hub and Balochistan rivers, with Rs3bn to be released in the current quarter and the remaining Rs7bn in the fourth quarter of the fiscal year. The committee approved Rs1bn for the Ministry of Information and Broadcasting’s Film and Drama Finance Fund.
Published in Dawn, January 14th, 2026
