LCIA proceedings in GoP-SHPL case: PPIB files Rs1.52bn expense claims

ISLAMABAD: The Private Power & Infrastructure Board (PPIB) has submitted claims amounting to Rs 1.52 billion (GBP 4,061,838) for expenses related to the London Court of International Arbitration (LCIA) proceedings between Star Hydropower Limited (SHPL) and the Government of Pakistan (GoP), sources close to the Managing Director of PPIB told Business Recorder.

According to sources, the Managing Director of PPIB cited three ongoing arbitration disputes while seeking budget allocations. The reference was made to a meeting held at the office of the Attorney General for Pakistan on February 22, 2023, where it was decided that the Power Division would bear all legal expenses arising from the arbitration. The Principal Accounting Officer/Secre-tary Power subsequently approved the engagement of legal counsel and other related costs.

As per PPIB’s submission, the claim arising from the tariff award dated May 7, 2024, for the 147 MW Patrind project amounts to Rs 1,045,700,418 (GBP 2,781,562).

Int’l dispute with Star Hydro: Pakistan govt facing ‘ifs & buts’ situation

Another claim, totaling Rs 373,966,315 (GBP 994,750), is purportedly due from the Government of Azad Jammu and Kashmir (AJ&K) on account of the imposition of sales tax on services under the AJ&K Finance Act 2015. Both of these claims were calculated using the conversion rate of Rs 375.94 per GBP as of October 15, 2025.

The third claim, amounting to Rs 102,356,294 (GBP 285,526.62), pertains to damages due to delayed invoice payments, including interest at the delayed payment rate. The average conversion rate applied for this claim was Rs 358.4826 per GBP.

PPIB has requested regular budget allocations for fiscal years 2024–25 and 2025–26 through the Power Division’s budget call circular. Additionally, it submitted a request for a supplementary grant on September 27, 2024. However, no allocation has been made in the regular budget for PPIB in respect of LCIA arbitration expenses.

“The PPIB is not in a position to bear such substantial arbitration costs, considering its increased budgetary requirements and operating expenses following the merger of AEDB into PPIB,” sources quoted the Managing Director as saying. “The PPIB has already spent Rs 440,007,237 from its own resources on LCIA arbitrations with SHPL, which has significantly impacted its operational finances.”

In light of this, the PPIB urged the Power Division to approach the Finance Division on an urgent basis for the allocation of Rs 1,522,023,022 (equivalent to GBP 4,061,839) through a Technical Supplementary Grant (TSG) under the head of account A03919 – Payment to Others for Services Rendered, Demand No. 35 – Current Expenditure of Power Division.

The LCIA arbitration reference No. 246356 pertains to a dispute between Star Hydropower Limited (the “Company”) and the GoP under the GoP Guarantee dated December 20, 2012, related to payment obligations of CPPAG/NTDC under the Power Purchase Agreement (PPA) signed on March 8, 2012. An award dated May 7, 2024, was issued by the LCIA in arbitration No. 215280 between the Company and the Power Purchaser concerning disputes under the PPA.

A second arbitration (No. 246378) involves the Company and the Government of Azad Jammu & Kashmir (GoAJK) under the GoAJK Implementation Agreement (IA) dated February 11, 2012. The Company has sought recovery of certain amounts under the guarantee, claiming them due from the GoAJK in relation to the imposition of sales tax on services under the AJ&K Finance Act 2015, effective from July 2015.

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