So Prime Minister Imran Khan announced that the Pakistani government along with the help of Turkish President Recep Tayyip Erdogan, have resolved the Karkey dispute and this in turn helped Pakistan avoid paying a massive $1.2 billion penalty.
In a post made on the social media platform Twitter, said the resolution of the Karkey dispute had helped save Pakistan a massive USD1.2 billion penalty imposed by the International Centre for settlement of investment disputes (ICSID).
Moreover, the prime minister also congratulated the government team for doing an amazing excellent job in achieving the amazing feat. It should be noted that the Prime Minister did not reveal any details about the help given by the Turkish premiere to resolve the issue. He also personally requested the President Erdogan to use his “good offices” to resolve the issue as Islamabad’s ailing economy was not stable enough toafford to pay such a hefty fine, according to a senior Pakistani Foreign Ministry official.
Karkey Karadeniz Elektrik Uretin (KKEU) was one of 12 rental power companies that were awarded contracts by the PPP government in 2008-09 to ‘resolve’ the power crisis in Pakistan.
In addition to things,one ship was brought to Karachi port in April 2011 to provide electricity to the national grid under the then government’s RPP policy to help resolved the energy crisis issue. However, they failed to generate 231 megawatts as was required under the agreement, even though $9m had been paid to the company in advance as capacity charges.
The plant produced only as much as 30-55MW of electricity and on top of that it cost of Rs. 41 per unit, which was a serious breach of contract, according to the prosecution. This has in turn led to a 50 percent increase in the refund claim by the government, from $80m to $120m.
According to the National Accountability Bureau (NAB), after a reference was filed against Karkey, the Turkish company had requested a plea-bargain deal and said it was ready to pay $18 million to NAB and promised not to go for international arbitration.
However, some politicians moved the Supreme Court and then chief justice Iftikhar Mohammad Chaudhry had struck down the deal and insisted on recovering the full $120 million from the Turkish firm.
As a result, Karkey moved the International Centre for Settlement of Investment Disputes (ICSID) in 2013, seeking compensation for the losses incurred by its vessels in terms of damage or depreciation for not being allowed to leave Karachi port for almost 16 months. The Turkish company later won the case in 2017.
Adviser to Prime Minister on Finance, Revenue and Economic Affairs Abdul Hafeez Shaikh said that the government, under the leadership of Prime Minister Imran Khan, had resolved Karkey dispute and saved $1.2 billion.