SHPL-NTDCL dispute: Govt may engage international firm

The Government is likely to engage an international firm to represent the government of Pakistan (GoP) at the London Court of International Arbitration (LCIA) in dispute with Star Hydro Power Limited (SHPL) and National Transmission and Despatch Company Limited (NTDCL), well informed sources told Business Recorder.

In this regard, a meeting was held at the Office of the Attorney General on October 27, 2022, to discuss the way forward in the matter.

The participants recalled the final arbitral award rendered by the LCIA on May 18, 2022, under the Power Purchase Agreement (PPA) executed between Star Hydro Power Limited and NTDC (the first arbitration). Pursuant to a notice served to the GoP of August 30, 2022, conveying that a dispute had arisen under the Guarantee, the Company has now submitted a Request for Arbitration (RFA) against Pakistan on September 30, 2022.

The participants also recalled the second arbitration instituted by the Company under the PPA, on August 31, 202l in relation to tariff determination by Nepra (Second Arbitration).

In this regard, the Ministry of Energy (Power Division), in Office Memorandum No. 10(80)/ 2021-IPPs, had sought this Office’s opinion, amongst other questions, on the following: in case, amicable settlement through negotiations is not feasible or possible, whether the GoP should take the option to participate in and join the second Arbitration proceedings under the auspices of LCIA in view of Section 7.3 of the GoPIA?

The participants extensively deliberated whether the GoP should participate in the Second Arbitration. Adil Sharif, DG-Law, Private Power and Infrastructure Board (PPIB), gave the preliminary view that the GoP should participate in the Second Arbitration. The representative from GPPA and the Attorney General’s office opined that it would be prudent to first seek a legal opinion from CPPA’s external Counsel, Mayer Brown LLP, in the Second Arbitration on the question before determining whether the GoP should become a party to the proceedings.

According to sources, in relation to the dispute under the guarantee in the first arbitration, the participants agreed that an external foreign law firm with expertise in power sector disputes be engaged to represent the GoP in the dispute under the guarantee before the LCIA. The Office of the Attorney General and PPIB shall assist the foreign law firm in the course of the LCIA proceedings.

In light of discussion, the participants unanimously approved the following: (i) pursuant to the Standard Operating Procedures (SOP’s) for engagement of foreign law firms of February 17, 2015, a foreign law firm shall be short-listed and engaged to represent the GoP in the dispute under the guarantee and ;(ii) Attorney General Office shall obtain a legal opinion from Mayer Brown LLP on the question delineated at Para 3. All expenditure in this regard, shall be borne by CPPA-G.

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