ISLAMABAD: The Power Division is set to spend billions of rupees to contest an international arbitration initiated by Halmore Power Generation Company Limited (HPCL) — costs that will eventually be recovered from electricity consumers, sources at the Central Power Purchasing Agency (CPPA-G) told Business Recorder.
The move follows a Notice of Arbitration filed by Mian Karim-ud-Din, owner of the 225 MW Halmore Power Plant, who has formally launched investor-state arbitration proceedings against Pakistan under the UK–Pakistan Bilateral Investment Treaty. The claim, estimated at $80 million, accuses the government of actions that allegedly harmed foreign investment in Pakistan’s energy sector.
A high-level meeting was recently held at the International Disputes Unit of the Attorney General’s Office to finalize the response strategy and select an international legal firm. The arbitration, governed by UNCITRAL Arbitration Rules 2021, requires Pakistan to file its response by November 8, 2025. Officials warned that legal proceedings could span several years and incur legal fees exceeding $5 million.
Karim-ud-Din has hired the globally renowned firm Gaillard Banifatemi Shelbaya Disputes, led by international arbitration expert Yas Banifatemi. Pakistani authorities, in turn, plan to engage a comparable international legal team to defend the case, in line with established government procedures.
The dispute stems from Pakistan’s alleged coercive renegotiations with Independent Power Producers (IPPs) following the 2020 inquiry into power sector contracts. The claimant alleges pressure, intimidation, and financial losses due to tariff reductions imposed in 2021 and subsequent actions against Halmore Power.
However, the Power Division’s Task Force has rejected these claims as false and baseless, asserting that all negotiations were conducted transparently and with mutual consent. Officials noted that Halmore and its management are already under investigation for multiple regulatory and financial irregularities in Pakistan.
To meet tight deadlines, the Power Division and Task Force have been directed to submit a detailed factual assessment by October 23, while the Attorney General’s Office will shortlist international firms and present fee proposals before executing engagement letters. A draft response to the arbitration notice is expected by November 5, 2025.
Sources confirmed that all arbitration-related costs — including foreign legal expenses — will be borne by the Power Division and subsequently passed on to end consumers through the electricity tariff adjustment mechanism.
Story by Mushtaq Ghumman
