ISLAMABAD: In a development that could escalate into an international arbitration case, a consortium of Saudi and Kuwaiti investors in K-Electric has served a $2 billion legal notice to the Government of Pakistan, alleging violations of investment rights under the OIC Investment Agreement.
The investors — Saudi Arabia’s Al Jomaih Group and Kuwait’s Denham Investments Limited — are represented by the London-based law firm Steptoe International (UK) LLP. The 67-page notice, dated October 20, was sent to the Attorney General for Pakistan, the Prime Minister’s Office, and the Special Investment Facilitation Council (SIFC).
This marks the first-ever legal claim against Pakistan under the Agreement on Promotion, Protection and Guarantee of Investments Among Member States of the Organisation of Islamic Cooperation (OIC). The notice came just a day before the Prime Minister’s scheduled visit to Saudi Arabia, adding to the diplomatic sensitivity of the matter.
The investors allege that Pakistan has repeatedly breached international obligations by blocking legitimate business transactions, interfering in regulatory matters, and failing to protect their investments from unlawful third-party actions — actions they claim have caused over $2 billion in financial losses.
At the heart of the dispute is the government’s failure to approve the $1.77 billion sale of K-Electric’s shares to Shanghai Electric Power, agreed in 2016. The notice claims Pakistan’s refusal to issue key regulatory and security approvals amounts to “indirect expropriation.”
The investors also cite delayed payments of government dues, tariff disputes, and alleged regulatory manipulation by the Power Division and NEPRA, which they say imposed unrealistic tariff conditions, costing K-Electric nearly Rs100 billion annually.
Additionally, the investors accuse Pakistani businessman Shaheryar Chishty of an “orchestrated takeover” of K-Electric’s parent company through offshore entities and allege misappropriation of over Rs10 billion, claiming Pakistani regulators failed to act.
While the investors have invited the government to resolve the issue amicably through negotiations, they warned that failure to do so could lead to formal arbitration proceedings under the OIC framework.
Story by Khalid Mustafa
