ISLAMABAD: Pakistan LNG Limited (PLL) on Monday withdrew its termination notice for the operation and services agreement (OSA) with the Pakistan GasPort Consortium (PGPC) that owns and operates the LNG terminal-2, after losing a case in the London Court of International Arbitration (LCIA).
The arbitral tribunal appointed under the LCIA Rules, 2014, on April 26, 2023, issued its award in the arbitration between PGPC and PLL, declaring the termination notice issued by PLL on 14 October 2019 as void and illegal.
The tribunal didn’t restrict it to just annulling the termination of the agreement, but also went further by directing PLL to provide PGPC with a Stand-by Letter of Credit for $21,481,272 as prescribed in the OSA.
“We have decided not to challenge the LCIA decision and we accepted the verdict which is why PLL has withdrawn all notices issued to PGPC including OSA termination notice,” PLL spokesman said.
The PLL has withdrawn termination notice, the Intent notice, the Option Exercise Notice, the Lease Option Exercise Notice, the CPS Option Exercise Notice, and the Novation Notice to PGP Consortium Limited, Fauji Oil Terminal & Distribution Company Limited, BW FRSU II PTE Ltd, BW Fleet Management AS, Port Qasim Authority, and Xinjiang Petroleum Engineering Company Limited.
“The withdrawal of all notices earlier issued to the PGP Consortium Limited and other players was a must to show the compliance of the LCIA verdict.” Pakistan LNG Terminal Limited (PLTL), which later merged with PLL, terminated its agreement with PGPCL for not timely depositing a fresh credit rating guarantee equal to $10 million in cash or asset value of $15million.
It is pertinent to mention that PGPCL had later deposited the fresh required guarantee, but PLL refused to accept it and maintained its decision to terminate the OSA signed with PGPCL. This prompted PGPCL, which set up the LNG terminal at a cost of $176.5 million, to move LCIA, which has given the award in favor of PGPCL.
The arbitration tribunal ruled that PLL was not entitled to terminate its agreement with PGPC to operate the LNG Services Infrastructure (Terminal) at Port Qasim, Karachi.
The tribunal declared the termination notice issued by PLL on October 14, 2019 as void and illegal. As a result, all subsequent notices issued by PLL to various public authorities and private persons expressing its intention to acquire the terminal were also void. The tribunal also rejected PLL’s claim for $991,546 on account of gas allegedly lost by PGPC. —