$1.2 billion fine to be paid to Turkey’s Karkey Power Plant likely to be waived
“International institutions, through high-level backdoor contacts, have agreed to waive off the penalty. ''
Babar Awan, Senior lawyer, and PTI (Pakistan Tehreek-e-Insaaf) leader, has said that the $1.2 billion fine which Pakistan had to pay to Turkey’s Karkey rental power plant is most likely to be waived.
“International institutions, through high-level backdoor contacts, have agreed to waive off the penalty. This is very good news for Pakistan,” – said Babar Awan on Friday while addressing the media.
“International institutions have shown their trust in Prime Minister Imran Khan.” – He continued.
ICSID (International Centre for Settlement for Investment Disputes) asked Pakistan to pay a sum of $760 million last year, along with the interest to Karkey Karadeniz Elektrik Uretim, a ship-based energy firm from Turkey, after arbitration claims were filed against the country under Bilateral Investment Treaty. Karkey then went to the US, UK, and Germany to impose the court’s judgment.
Due to the court’s verdict, Pakistan’s abroad assets were at risk of being taken over as security, to impose the decision. This could have put the country in major financial issues. In June of 2019, Islamabad made the decision to open an escrow account in a European bank for depositing $50 million in partial security, while trying to get an extension of stay in the international court’s verdict’s enforcement.
Karkey was one out of the 12 rental companies that were given contracts for electricity production by the PPP government back in 2009. The Turkish company installed a 232-megawatt ship-based rental power plant and signed ‘rental services agreement’ back in April of 2009, this was done so under Rental Power Policy 2008 for electricity production in collaboration with Lakhra Power Generation Company.
Suo Motu action was taken by Supreme Court in 2012 against rental power projects, declaring all agreements signed under the Rental Power Policy 2008 of such nature unlawful.
The court ordered NAB (National Accountability Bureau) to look further into the projects. NAB then started the investigation and due to this, the power-producing ship of Turkish firm couldn’t leave Pakistan. As per NAB, Karkey ship was brought to Karachi Port in 2011, with the intention to provide electricity to the national grid under Rental Power Policy, this would help in overcoming the energy crisis.
The power plant produced 30 to 55MW of electricity, at a cost of Rs. 41 per unit, which was a breach of contract. In April 2019, Laeeq Ahmed Sheikh, the main suspect in rental power plants case, who is presently in the custody of NAB, agreed to have received a bribe of $350,000 for breaking the deal made between Pakistani and Turkish government.
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