ISLAMABAD – Prime Minister Imran Khan has announced that the Pakistanigovernment, with the help of Turkish President Recep Tayyip Erdogan, hasamicably resolved the Karkey dispute and helped Pakistan avoid paying the$1.2 billion penalty.
In a Twitter message, he said the resolution of the Karkey dispute hassaved Pakistan USD1.2 billion penalty imposed by the International Centrefor settlement of investment disputes (ICSID).
linkImran Khan✔@ImranKhanPTIlinklink
PTI Govt, with the help of President Erdogan, has amicably resolved theKarkey dispute and saved Pak USD 1.2 billion penalty imposed by ICSID.32.9K link8:30 PM – Nov 4, 2019linkTwitter Ads info and privacy link
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The prime minister congratulated the government team for doing an excellentjob in achieving the feat. However, Khan did not give details about thehelp lent by the Turkish president to resolve the issue. He had personallyrequested Erdogan to use his “good offices” to resolve the lingeringdispute as Islamabad’s ailing economy could not afford to pay such a heftyfine, according to a senior Pakistani Foreign Ministry official.
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Karkey Karadeniz Elektrik Uretin (KKEU) was one of 12 rental powercompanies that had been awarded contracts by the PPP government in 2008-09to ‘resolve’ the power crisis.
A ship was brought to Karachi port in April 2011 to provide electricity tothe national grid under the then government’s RPP policy to overcome theenergy crisis. However, it failed to generate 231 megawatts as was requiredunder the agreement, even though $9m had been paid to the company inadvance as capacity charges.
The plant produced only 30-55MW of electricity and that too at a cost ofRs. 41 per unit, which was a serious breach of contract, according to theprosecution. This led to a 50 percent increase in the refund claim by thegovernment, from $80m to $120m.
According to the National Accountability Bureau (NAB), after a referencewas filed against Karkey, the Turkish company had requested a plea-bargaindeal and said it was ready to pay $18 million to NAB and promised not to gofor international arbitration.