Arbitrations before LCIA: SNGPL loses Rs19bn claims against NPPMCL

ISLAMABAD: Sui Northern Gas Pipeline Limited (SNGPL) has lost claims of approximately Rs 19 billion against National Power Parks Management Company (Private) Limited (NPPMCL) in two arbitrations before the London Court of International Arbitration (LCIA).

NPPMCL owns and operates two 1200MW RLNG-based power plants in Punjab, situated in Haveli Bahadur Shah, (Jhang), and Balloki, (Sheikhupura) and procures RLNG for power generation from SNGPL.

The disputes arose when in May 2018, SNGPL raised take or pay invoices against NPPMCL and subsequently proceeded to recover 10.37 billion rupees from the gas supply deposit maintained by NPPMCL under its Gas Supply Agreements. Disputing SNGPL’s claims, NPPMCL contested the assertions of SNGPL on multiple forums and ultimately submitted the disputes for final resolution to LCIA as per the agreed mechanism under the Gas Supply Agreements.

The sole Arbitrator issued its final awards related to these disputes earlier this week, holding that the documents produced by SNGPL in support of its claims “are little more than self-serving evidence.” The sole Arbitrator also held that SNGPL wrongly drew down the amount of approximately Rs 10.37 billion and directed SNGPL to pay the same to NPPMCL with interest from the date of recovery until full payment which amounts to approximately Rs 15.3 billion. In addition, the sole Arbitrator also dismissed the counterclaims raised by SNGPL against NPPMCL, including an additional claim of Rs 4.38 billion and noted that SNGPL had failed to discharge “its burden of proving their quantum.”

The final hearing for the LCIA Arbitrations initiated by NPPMCL took place from September 20 to September 25, 2021. The hearing was attended by officials of NPPMCL and SNGPL, and expert witnesses including Abid Latif Lodhi (renowned power sector expert heading AMA Energy Services) and gas sector expert, Mustafa Abdullah.

NPPMCL was represented in the LCIA arbitrations by ‘Cornelius, Lane & Mufti, Advocates and Solicitors’. The team from CLM comprised of Barrister Munawar-us-Salam, Barrister Waleed Khalid, Barrister Usman Akram Sahi, Barrister Faizan Daud, Amna Salam and Asad Ullah Khan.

Copyright Business Recorder, 2021