Out-of-court settlement: SIFC directs NHA to pay Rs1.29bn to Malaysian firm

ISLAMABAD: The Special Investment Facilitation Council (SIFC) has directed the National Highway Authority (NHA) to pay Rs1.29 billion to M/s Bina Puri, a Malaysian company, by April 9, 2025, as part of an out-of-court settlement following NHA’s loss in international arbitration.

The SIFC executive committee at its January 22, 2025 meeting had instructed NHA to ensure payment within the agreed timeline The dispute arose from the wrongful cancellation of M/s Bina Puri’s contract for the M-9 project by NHA, which led the company to pursue litigation in international arbitration. The arbitration tribunal had ruled in favour of Bina Puri Holdings Bhd, awarding damages against NHA.

The dispute stemmed from the termination of a RM864 million highway concession agreement, which Bina Puri Pakistan Private Ltd challenged as unlawful. The agreement, dated January 16, 2012, was for the conversion of the 136-km Karachi-Hyderabad superhighway from a four-lane road to a six-lane motorway under a build-operate-transfer (BOT) model, valued at Rs24.93 billion (RM864 million).

Despite multiple appeals by NHA being rejected by the courts, the authority had failed to make the required payment. This delay increased interest on the principal amount and negatively affected Pakistan’s reputation internationally.

M/s Bina Puri subsequently approached SIFC for resolution, and during a high-level meeting chaired by the communications minister, NHA was instructed to settle the matter out of court.

Upon SIFC’s request, the law ministry recommended an out-of-court settlement to prevent further financial losses, estimating that failure to settle would increase costs by approximately 50% of the principal amount due to accumulating interest.

On January 10, 2025, both parties had agreed to a Rs1.29 billion settlement, with NHA required to make the payment within 60 working days (deadline: April 9, 2025). Any delay beyond this period will result in a 10% interest penalty on the amount, effective from the signing date of the settlement agreement.

The communications ministry and NHA have been directed to fast-track the approval process and submit the PC-1 to the planning and special initiatives ministry by January 24, 2025, ensuring its inclusion in the CDWP (Central Development Working Party) agenda scheduled for January 27, 2025.

Under the SIFC directives, the communications ministry and NHA must ensure timely submission of documents to relevant forums, while the Ministry of Planning, Special Initiatives, and the Finance Division will expedite the approval and release of funds within the agreed timeline.