OIC pact related to KEL: PMO seeks PD’s views on Saudi, Kuwaiti investors’ complaint

ISLAMABAD: The Prime Minister’s Office has sought the Power Division’s comments on the notice of dispute sent by Saudi and Kuwaiti investors under OIC investment agreement relating to K-Electric Limited (KEL), well informed sources told Business Recorder.

The PMO sought this information at a time when two groups of KE’s Board are fighting with each other due to which several matters of the company are unsettled.

Deputy Prime Minister/Foreign Minister, Ishaq Dar has been assigned the responsibility to resolve issues of Al-Jomaihas whenever any Pakistani official delegation undertakes any visit to Riyadh, Al-Jomaih’s reservations come under discussion. Both Al-Jomaih and Denham have served a USD2 billion notice on Islamabad.

K-Electric: Govt facing arbitration threat from Saudi, Kuwaiti investors

In the Arbitration Notice, shared with the PMO, International Law Firm, M/s Steptoe proposed that the parties enter into negotiations (in place of conciliation) or, alternatively, proceed with conciliation, while reserving their right to move immediately to arbitration. Against this background, the law firm requested that the government provide the contact details of its designated representatives for settlement discussions.

According to the notice, more than three weeks have passed since its service, and as of November 12, 2025, no acknowledgment or substantive response has been received from any representative of the Government of Pakistan. Nor have contact details of any authorized representative been provided to engage in the amicable settlement process contemplated under Article 17(1) of the OIC Investment Agreement. Accordingly, it appears that the parties are unable to agree on conciliation.

“The purpose of this letter is to put the government of Pakistan on notice that our clients now intend to proceed to arbitration in accordance with Article 17(2) of the OIC Investment Agreement. We shall, therefore, write to you shortly pursuant to Article 17(3) of the Agreement, identifying the name of the arbitrator our clients intend to appoint. The balance of the requirements of Article 17(3) are satisfied by the details set out in the Notice,” the law firm stated.

The notice further stated that proceeding to arbitration without further delay has become necessary because of the significant and ongoing financial, regulatory, and reputational harm being sustained by the investors and their investment in Pakistan. These include: (i) the continued failure to give effect to the 2025 Multi-Year Tariff determinations issued by Nepra and the ongoing unlawful review proceedings initiated by CPPA-G under government instruction; (ii) the continued erosion of K-Electric’s financial position due to non-implementation of lawful tariff determinations and delays in payment of tariff differential subsidies and other government dues; (iii) the continued inaction of the Securities and Exchange Commission of Pakistan, the State Bank of Pakistan, and the Federal Investigation Agency regarding the regulatory breaches and transactions described in the notice; and (iv) the loss of value and impairment of the investors’ governance rights in K-Electric and their related entities.

In addition, Steptoe enclosed a letter sent by AJPL and Denham to the Board of Directors of K-Electric on November 9, 2025. In that correspondence, AJPL and Denham formally objected to steps aimed at convening a board meeting and altering the management of the company, including the proposed appointment of a new Chief Executive Officer.

According to the investors, such steps, if implemented, would violate existing orders of the Sindh High Court and directly prejudice their rights and the value of their investment in Pakistan.

The government of Pakistan, as a shareholder and through its nominated directors on K-Electric’s Board, has been fully aware of these actions and has taken no steps to prevent them. This continued inaction, occurring after the service of the notice, represents an ongoing and aggravated breach of the State’s obligations to provide fair and equitable treatment, maintain legal stability, and refrain from measures impairing the management and operation of the investment.

The investors maintain that they have acted at all times in good faith and in compliance with the orders of competent courts. They expect the government to do the same and to ensure that its nominees and agencies refrain from any action that may further exacerbate the dispute, including changes to K-Electric’s management.

“Unless the government of Pakistan communicates a proposal for immediate negotiations and identifies, by close of business on November 14, 2025, a duly authorized representative empowered to engage in settlement discussions, the investors will proceed to constitute the arbitral tribunal in accordance with Article 17(3) of the OIC Investment Agreement,” the law firm added. It remains unclear whether the government has responded to the notice.

Copyright Business Recorder, 2025