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Erdogan’s Help Saves Pakistani Govt From $1.2bn Penalty In Karkey Dispute

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Prime Minister Imran Khan has announced that the Pakistani government, with the cooperation of the Turkish president, has managed to resolve the Karkey dispute and helped the country avoid paying the $1.2 billion penalty.

In a tweet posted from his official account, the prime minister said that the PTI government had saved the country from the $1.2 billion penalty imposed by the International Centre for Settlement of Investment Disputes (ICSID).

The Karkey dispute occurred after the Karkey Karadeniz Elektrik Uretin (KKEU), a Turkish company, was awarded a contract by the Pakistan People’s Party government to resolve the power crisis.

Under the agreement, the company docked one of its ships in the port of Karachi to provide electricity to the national grid. However, it failed to generate the 231 megawatts (MW) and instead only produced 30-55MW in breach of the agreement. This led to the government increasing its refund claim from $80mn to $120mn.

The company offered to pay $18mn to the National Accountability Bureau as part of a plea-bargain deal. However, the deal was struck down by the then Supreme Court chief justice Iftikhar Chaudhry. The SC was moved to recover the full $120mn from the Turkish firm.

In response, the KKEU moved the ICSID in 2013 to seek compensation for the losses it incurred due to its vessels not being allowed to leave Karachi port. The case was won by the Turkish company in 2017.

A foreign ministry official was quoted in media as saying that the prime minister had requested Turkish President Recep Tayyip Erdogan to resolve the dispute as Pakistan could not afford to pay such a fine.

Adviser to the Prime Minister of Pakistan on Finance and Revenue Abdul Hafeez Shaikh said that this was a positive development for the country and the money could be spent on development and better facilities for the public.

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