ISLAMABAD – In a big setback the government of Pakistan has faced a bigblow in the international court of arbitration which has ruled against thePakistan government.
Sui Southern Gas Company (SSGC) lost a case in the International Court ofArbitration against Habibullah Coastal Power Company (HCPC) for inabilityto supply gas for the power plant in lieu of the agreement.
Officials said Pakistan will have to pay damages in millions of dollars andpreviously the government has lost key cases like Reko Diq and Karkey inthe International Court of Arbitration, reported *Express Tribune.*
In June 1995, the then federal cabinet in its meeting had approvedallocation of 25 million cubic feet gas per day (mmcfd) for HabibullahCoastal Power Company’s 140-megawatt combined-cycle independent power plantin Quetta.
As per the agreement, 4 mmcfd gas was to be provided on ‘as and whenavailable’ basis and 21 mmcfd on a firm basis.
The gas supply agreement (GSA) was reached between HCPC and SSGC onFebruary 28th, 1996, which was later revised on March 31st, 1996.
The agreement said if SSGC failed to supply gas in conformity with theagreement, the buyer (HCPC) would use its alternative backup supply fuelfor which the cost would be borne by the seller.
According to the agreement, alternative fuel has been categorized asdistillate fuel or fuel oil.
Alternative fuel cost has been determined as the cost differential betweengas and alternative fuel used by HCPC.
Till 2004, the inability to provide gas due to a high domestic in Quettaduring the winter period, SSGC either paid for the price differential orHCPC waived the price, said officials.
In January 2007, HCPC filed a case of the non-provision of gas supply inthe International Chamber of Commerce (ICC), Singapore for disputeresolution in line with terms of the agreement.
An ICC tribunal siding with HCPC instructed SSGC to pay damages to thepower producer, however, the state-owned utility submitted an appeal inSingapore’s High Court, which was rejected.