Pakistan wins Rs1bln damage claim against Chinese firm

ISLAMABAD: Pakistan has clinched a favourable ruling in an international court regarding the country’s one billion rupees of liquidated damage claim against a Chinese energy conglomerate for delaying renewable power projects, officials said on Saturday.

The officials said London Court of International Arbitration (LCIA) issued its final awards related to a dispute between Central Power Purchasing Agency (CPPA-G) and Zonergy Company Limited earlier this week.

In the determination of the disputes between the parties, the sole arbitrator decided the required commercial operations date, “as agreed between the parties under the respective energy purchase agreements, represented a valid and binding obligation”.

“Consequently, CPPA-G’s imposition of liquidated damages for the power projects’ delay in achieving COD (commercial operations date) by RCOD (required commercial operations date) was justified,” the official said, citing the awards.

The CPPA-G and three subsidiaries of Zonergy approached the London Court of International Arbitration earlier this year to agitate their disputes under three identical energy purchase agreements signed between CPPA-G and the subsidiaries of Zonergy in June 2015 to set up 300 megawatts of solar power project. Each solar independent power producer has capacity to generate 100 megawatts.

The final hearing for the LCIA arbitration numbers (183,881, 183,884 and 183,885) initiated by the independent power producers took place from April 29, 2019 to May 3, 2019 in Islamabad. The sole arbitrator appointed by the LCIA issued his final awards in the LCIA arbitration on November 19, 2019.

The federal cabinet has approved a draft of a renewable energy policy, envisaging 20 percent clean energy by 2025 and 30 percent by 2030, up from around 4 percent currently. The government would soon convene a meeting of the Council of Common Interests to finalise the renewable energy policy.

Consequent to expiry of RE Policy 2006 in March 2018, AEDB initiated the formulation of a new policy in view of government’s decision to come up with a policy aimed at creating conducive environment supported by a robust framework for the sustainable growth of renewable energy sector.

London Court of International Arbitration further determined that the identical liquidated damages provision in the energy purchase agreements was legal and enforceable.

“Consequently, the sole arbitrator dismissed the entire claim raised against CPPA-G by the subsidiaries of Zonergy,” the official said. CPPA-G was represented in the LCIA arbitration by ‘Cornelius, Lane & Mufti, Advocates and Solicitors’. The team from CLM comprised of Barrister Munawar-us-Salam (Advocate Supreme Court), Barrister Waleed Khalid (Advocate High Court), Adil Umar Bandial (Advocate High Court), Ahmed Tariq (Advocate) and Amna Salam (Advocate).