ISLAMABAD: The Siddiqsons Energy Limited (SEL) has proposed the resolution of its dispute with the Private Power & Infrastructure Board (PPIB) through an expert or a neutral arbitrator, to be mutually selected from among the most reputed experts in the energy sector, sources close to the Minister for Power told Business Recorder.
SEL Chairman Tariq Rafi has approached the Power Minister through a formal representation regarding what he described as the conduct of the PPIB, which culminated in the termination of the Letter of Support (LoS) and the encashment of the LoS performance guarantee amounting to USD3.5 million for a power project sponsored by Siddiqsons Energy Limited.
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The company claims that these actions were taken with serious prejudice and warrant intervention at the highest policy level.
The Power Minister has been informed that Siddiqsons Energy Limited is part of the Siddiqsons Group, a well-established Pakistani business conglomerate with a strong presence in tinplate manufacturing and exports.
The Group entered the power sector under the Power Generation Policy 2015, relying on declared policy assurances and lawful regulatory conduct.
Initially, the project was awarded as a 350 MW imported coal-based plant at Port Qasim. However, it was subsequently subjected to multiple fundamental changes driven entirely by government decisions, including conversion to Thar-based local coal and a reduction in capacity to 330 MW.
Later, the State Bank of Pakistan issued a moratorium requiring local utilization and relocation of the project site to Thar. These changes, SEL maintains, were not attributable to any default or omission by the investor but were entirely government-initiated.
Siddiqsons enhanced its Performance Guarantee from $1.75 million to $3.5 million in compliance with the Power Policy 2015. Despite this compliance, a further enhancement to $7 million was demanded, which the company says had no basis in the policy framework and therefore lacked lawful justification.
According to SEL, PPIB, through correspondence relating to the Lahore–Matiari HVDC transmission line, raised a demand for liquidated damages exceeding $16 million. This demand was made at a stage when the Power Purchase Agreement (PPA) had not become effective due to the non-achievement of financial close; therefore, no liability of any nature could arise.
The scale and timing of this demand, when viewed alongside the requirement for an enhanced Performance Guarantee, rendered the continuation of the project impossible and ultimately resulted in the termination of the LoS and encashment of the performance guarantee.
“It is a matter of record that PPIB denied in court that any Lahore–Matiari HVDC line liquidated damages had been raised, notwithstanding documentary evidence to the contrary,” Rafi stated. “Following Siddiqsons’ refusal to submit additional financial guarantees, the USD3.5 million performance guarantee was encashed, compelling the investor to seek judicial recourse. These proceedings have remained pending for years, during which the encashed amount has caused sustained and punitive financial loss.”
The company believes that Pakistan must maintain an environment genuinely conducive to investment. Prolonged litigation, it argues, creates an impression of institutional insensitivity to legitimate investor interests, including the forfeiture of financial deposits.
Failure to resolve disputes in a timely and effective manner, SEL warns, erodes investor confidence and seriously damages Pakistan’s investment climate. The SEL maintains that if the company had genuinely breached the Letter of Support, the termination and encashment should be upheld on merit.
However, if the investor acted within the policy framework, the encashment of the $3.5 million bank guarantee is neither equitable nor justifiable. Delays in dispute resolution, it adds, send adverse signals to existing and prospective investors who rely on fairness, policy certainty, and continuity.
To bring the long-pending matter to a conclusion, Siddiqsons Energy Limited has proposed referring the dispute to an expert or a neutral arbitrator, mutually selected from among the most reputed energy sector experts.
The expert or arbitrator would decide the matter through expert determination or a binding award, which would be implemented forthwith without recourse to further proceedings.
“This request is made in fairness and good faith to evaluate whether the decision regarding the encashment of the bank guarantee was made on merit. We remain confident that your stewardship and timely direction will send a clear and reassuring message that Pakistan values and protects genuine investors who act in reliance on declared policy,” Rafi said.
Copyright Business Recorder, 2025