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Pakistan

Web Desk
November 4, 2019

Karkey dispute resolved with help of Turkey's Erdogan, $1.2bn saved: PM Imran

Pakistan

Web Desk
Mon, Nov 04, 2019
The News/Files

ISLAMABAD: The Pakistani government has resolved the Karkey dispute with the help of Turkish President Recep Tayyip Erdogan, Prime Minister Imran Khan announced on Monday.

In a tweet, PM Imran said the matter was resolved "amicably" and that Pakistan had successfully saved $1.2 billion — the sum the International Centre for Settlement of Investment Disputes (ICSID) had imposed as a penaltiy on Islamabad.

"PTI Govt, with the help of President Erdogan, has amicably resolved the Karkey dispute and saved Pak USD 1.2 billion penalty imposed by ICSID," the premier wrote.

How much security was Pakistan asked to deposit  in Karkey dispute?

Last month, the ruling Pakistan Tehreek-e-Insaf's (PTI) leader and senior lawyer, Babar Awan, had told media that the $1.2-billion sum was likely to be waived off due to backdoor negotiations between the two countries.

'Trust in Prime Minister Imran Khan'

"International institutions, through high-level backdoor contacts, have agreed to waive off the penalty," Awan had told reporters at a press conference. "This is very good news for Pakistan. International institutions have shown their trust in Prime Minister Imran Khan."

The ICSID — an arm of the World Bank that offers arbitration and conciliation services for disputes between governments and private foreign investors — had slapped a penalty worth $760 million plus interest to the Turkish ship-based energy firm, Karkey Karadeniz Elektrik Uretim, following the latter's move to register arbitration claims against Pakistan under a bilateral investment treaty (BIT).

In September 2017, it had decided in favour of Karkey Karadeniz Elektrik Uretim and imposed a fine. The Turkish firm had registered a claim with the ICSID against Pakistan in 2013 over the violation of a contract worth as much as $564.6 million for a five-year period to build rental power plants in Karachi.

Talks over the years

Sources had informed Geo News at that time that Pakistan had offered in March 2017 to pay a Rs700-million compensation to Karkey through the Turkish government.

However, earlier this year, Pakistan had moved to open an escrow account in a bank in Europe to pay a partial sum as it sought extension in enforcement of the ICSID's verdict.

Karkey had been awarded the contract in 2009 by the Pakistan People's Party-led government.

It is noteworthy that the contract had been struck down in 2012 in a Supreme Court decision by then-CJP Justice Iftikhar Chaudhry following a petition by Pakistan Muslim League-Nawaz (PML-N) leaders Khawaja Asif and Faisal Saleh Hayat, calling for shutdown of all rental power projects in the country.