ISLAMABAD, May 12: The government decision of expelling the Turkish contractor from Peshawar Motorway project, has been challenged at the International Centre for Settlement of Investment Disputes (ICSID), reviving the memories of the Government-Hubco dispute.

Ministry of Communication sources told Dawn that the National Highway Authority has received the communication from the Turkish contractor that it had approached the International Centre for Settlement of Investment Disputes (ICSID).

Besides the issue whether Pakistan would win or lose, Pakistan would end up losing a few million dollars immediately in the form of legal fees to local as well as international law firms. Pakistan’s reputation with regard to investment climate in the country would also suffer.

The Turkish company which had been expelled from the site one year ago, has approached the ICSID, on the basis of Bilateral Investment Treaty between Pakistan and Turkey. The ICSID is a forum set up under the UN Convention.

The contractor is demanding about US$400 million from the Pakistan as it had been expelled from the site for its failure to complete two sections of Peshawar Motorway on the agreed terms and schedule.

Under the agreement the Turkish contractor was bound to complete it by December 2002. The contractor had been saying that it would complete the project on schedule.

On another front the government failed to call the guarantee which the Turkish banks had offered. The Turkish contractor obtained a prohibitory injunction against the encashment of guarantees till the dispute was resolved.

Sources said that the NHA was surprised to receive the communication that matter had been taken to the ICSID, and wrote a letter to the Turkish company seeking an explanation regarding the intent and purpose of approaching the ICSID.

The cost of the project which was started in the beginning of early nineties has risen from Rs16 billion to over Rs40 billion.