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RPP case lands Pakistan with $700 million fine

RPP case lands Pakistan with $700 million fine

The International Centre for Settlement of Investment Disputes (ICSID) has awarded $700 million to Karkey Karadeniz Elektrik Uretim AS, a Turkish company that constructs and operates rental power plants (RPPs), in a damages suit it had brought out against Pakistan.

According to the ICSID website, the award was announced on August 22, but sources told The Express Tribune the centre had given its verdict in March 2016 and now the tribunal has determined the quantum of the award, which is around Rs74 billion.

Sources revealed the award was kept secret by the Pakistan government. Not just that, the Turkish firm was also requested to keep details of the demeaning award under wraps.

Karkey had filed the damages suit against Pakistan at the ICSID in February 2013 after the Supreme Court’s ruling in the Rental Power Projects case in 2012.

Karkey was awarded a $560 million contract for power ship operations in Pakistan to overcome a spiralling power crisis in the country. The initial contract was for five years. However, PPP-Patriots leader Faisal Saleh Hayat and the current foreign minister Khawaja Asif approached the top court against the contract awarded by the then PPP government.

In 2012-13, then NAB prosecutor general KK Agha attempted to settle the issue with Karkey but the then chief justice Iftikhar Chaudhry stopped his efforts and warned NAB officials of strict action in case a settlement was reached with the Turkish firm.

At present, accountability courts are adjudicating corruption references filed over the RPP issue against several senior officials, including former prime minister Raja Pervez Ashraf. A senior official feared the ICSID verdict might affect NAB’s proceedings in these cases.

Karkey’s case is not the only one where Pakistan had to bite the dust. In the Reko Diq case, the ICSID dismissed Pakistan’s allegations of corruption against the Tethyan Copper Company Pty Ltd (TCC). Later, the TCC made a claim of $11.5 billion but Pakistan’s rejected it. Now the quantum stage has started, with both federal and Balochistan governments involved, and the TCC may agree to an out-of-court settlement.

Sources said the quantum phase of the arbitration is a prolonged, self-contained phase in itself, in which the office of the attorney general for Pakistan is actively participating in defence of the country.

At present, AGP Ashtar Ausaf is abroad to deal with several issues, as Pakistan faced international litigations in a number of cases, including Indian spy Kulbhushan Jadhav’s case at the International Court of Justice.

Last week, Pakistan requested the World Bank to establish a court of arbitration to decide on Pakistan’s objection over two dam projects of India. It is leant that Pakistan has spent more than Rs1.3 billion on lawyers’ fees to contest the cases which are recently being adjudicated before the ICJ.

Raheel Kamran Sheikh, an executive member of the Pakistan Bar Council, said it was a matter of concern that Pakistan’s success rate in international arbitration cases was 2 per cent, while India’s success rate was 60 per cent.

“We lost important cases at international forums in the last couple of years,” Sheikh said. However, an official differed, claiming that the success rate was ‘very good’ during the era of former military ruler Pervez Musharraf.

The Express Tribune

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