• Monday, March 18, 2019

Karkey files another $2.1b damages claim against Pakistan

Discussion in 'Pakistan Economy' started by cb4, Feb 11, 2014.

  1. cb4

    cb4 ELITE MEMBER

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    ISLAMABAD - Karkey Karadeniz Electricity Production Corporation (Karkey) has filed a memorial to the World Bank’s International Centre for Investment Disputes (ICSID) claiming $2.1 billion damages against government of Pakistan.
    The filing of the claim with ICSID signals not only a significant move in advancing the arbitration forward but also ranks as one of the largest claims filed to ICSID, the Washington DC-based arbitration body.
    The claim was filed on January 31 this year. According to Karkey statement an independent international expert has estimated the total amount of damages Pakistan may be liable to pay to Karkey as a result of unlawfully detaining the company’s power ships and energy-producing vessels. Karkey is seeking compensation from Pakistan for breach of its obligations under the bilateral investment treaty (BIT), breaches of international law, and defiance of ICSID provisional measures order, in connection with Karkey’s investment in a rental power project (RPP) in Karachi.
    In response to its treatment by Pakistani authorities, including the ongoing detention of four of its vessels, the Turkish energy firm, Karkey Karadeniz Elektrik Uretim AS (Karkey), had registered a claim with the World Bank-affiliated International Centre for Settlement of Investment Disputes (ICSID) against the Government of Pakistan early in 2013.
    The initial contract value of Karkey’s Powership operations in Pakistan was USD 560 million for the duration of five years. The claims amount as calculated by experts’ sums up the damages obtained as a result of the loss of earnings and costs associated with the detention of its vessels. Karkey’s vessels have been detained in Pakistan since April 2012, and prevented from being redeployed to other productive destinations where countries in need have been asking and waiting for these power ships, causing Karkey enormous financial harm.
    However, the Supreme Court ordered NAB to demand additional monies from Karkey allegedly without any just or legal basis. In response, NAB continued to detain four of Karkey’s ships in Pakistani waters, and - allegedly without any legitimate basis or justification - demanded approximately $128 million from Karkey, which Karkey does not owe Pakistan, according to statement.
    Moreover, the vessels are exposed to accelerated deterioration and perils in their current locations, resulting in an ICSID Arbitration Board decision on 8 October 2013 to release the Turkish-flagged powership Kaya Bey to Dubai to undergo maintenance.
    However, according to statement, the Pakistani government has not complied with ICSID’s demands and continues to detain the vessel.
    Karkey’s investments in Pakistan originated when the authorities announced an international competitive bid for energy firms to provide relief from continuing power shortages through the use of rental power projects (RPP). Karkey won one of the bids and sent four vessels, including two of its Turkish-flagged powerships, supplying 232 Megawatts of power to Pakistan.
    However, as per the statement, after 11 months of Pakistan’s failure to cure its default, Karkey discontinued providing services without payment and ultimately was forced to terminate the contract due to Pakistan’s failure to perform and defaults, including its failure to honor its sovereign payment guarantees.

    Karkey files another $2.1b damages claim against Pakistan
     
  2. ashish1

    ashish1 FULL MEMBER

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    Thats about 25% of Pakistan's foreign resrves.Will Pakistan pay??
     
  3. That Guy

    That Guy PDF THINK TANK: ANALYST

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    Depends. Pakistan will probably fight this, but if they lose, they'll pay. The last thing Pakistan needs is nervous investors.
     
  4. ashish1

    ashish1 FULL MEMBER

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    2 billion dollars is too much you could buy an aircraft carrier or an highly advanced nuclear submarine from China!!!!
     
  5. That Guy

    That Guy PDF THINK TANK: ANALYST

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    It won't be a single installment, no one would agree to that. If Karkey expects that, then they'll soon find themselves out of 2.1 billion dollars because they won't get a cent. The payment would be drawn out over a number of years, so that the giver doesn't go bankrupt, and the receiver can still get the full amount.
     
  6. Counter-Errorist

    Counter-Errorist FULL MEMBER

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    I don't understand - why did we detail those ships?
     
  7. halupridol

    halupridol SENIOR MEMBER

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    2bil for detaining ships.......yeh toh loot hai...itna kya nuksaan ho gaya??
     
  8. Chak Bamu

    Chak Bamu RETIRED MOD

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    1. Karkey should have thought about consequences of jumping into a tainted deal.

    2. 2.1 B is just a figure. If ever there is a settlement, it would be far less than that.

    3. If Karkey gets anything, let Zardari pay for it. PPP ministers involved should be put through a wringer to pay for this.

    4. This should be made an example for all those lusting after corrupt deals. No one should ever deal with Zardari or any of his blood-relatives, including his children who have been brought up on Haram-ka-maal.
     
  9. Jazzbot

    Jazzbot ELITE MEMBER

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    Yes, and you are expecting Nawaz Sharif to do all this, right? :disagree:
     
  10. Yogi

    Yogi FULL MEMBER

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    Whether its gonna be a single payment or in installments will depends upon Courts decision. U or i hv no authority to pass judgement here.

    Though i think Pakistan will end up paying for damages(considering ur poor track record in International courts) but IMO the damage amount should be considerably reduced.

    $2 billion to loot hai yar but even $1 billion in damages n penalty will hv a serious impact on ur forex reserves n budget deficit.

    Plus the damage it'll cause to Pakistan's image in International market n loss of International Invester's faith, will be another cause of worry for u guys.
     
  11. ashish1

    ashish1 FULL MEMBER

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    Because you were not able to pay them and then they refused to continue the supplies and then Pakistan detained those ships in protest.(Which is ofcourse wrong)
    Did you read the article?
     
  12. Counter-Errorist

    Counter-Errorist FULL MEMBER

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    The article provides one side of the story. Doesn't go much into the reasons for detention.
     
  13. ashish1

    ashish1 FULL MEMBER

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    HUH??
    Pakistan failed to pay for the supplies so it is company's fault???
     
  14. Counter-Errorist

    Counter-Errorist FULL MEMBER

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    Dramatic turn in Karkey dispute - DAWN.COM

    • They took our advance and produced less only 13% of the agreed energy.
    • Karkey tried to leave with their ships without refund
    • Supreme court held chairman of NAB directly responsible for retrieving the refund and penalty for breach of contract by Karkey
    • NAB detained the ship pending refund and penalty
     
  15. DESERT FIGHTER

    DESERT FIGHTER ELITE MEMBER

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    Another corruption scandal.. Marzi marso corruption na chadsou.. PPP thapay waray..