ISLAMABAD: In a significant legal setback for the Government of Pakistan, the Korean firm Star Hydro Power Limited (SHPL) has triumphed in its case against the National Transmission and Despatch Company (NTDC) in the London Court of International Arbitration (LCIA). The dispute centered on the inclusion of escalated costs in the true-up tariff and NTDC’s failure to evacuate electricity from the 147 MW Patrind Hydropower Project post-commissioning.
The LCIA has ruled in favor of the Korean investors, imposing a penalty of Rs690.568 million on NTDC. Additionally, NTDC is required to cover the court proceedings costs amounting to 245,688 British pounds.
The conflict began due to the inaction of the previous PTI government in addressing the escalated costs in the true-up tariff. In June 2022, SHPL sought compensation of $94 million (Rs19.6 billion) from the LCIA, citing NTDC’s failure to evacuate electricity for six months following the project’s commissioning and the costs incurred in constructing a delivery point to the national grid.
Despite constructing the delivery point without objections from NTDC, the cost overruns were not reflected in the tariff, leading SHPL to pursue legal action. The Patrind Hydropower Project, operational since November 2017, had its COD stage tariff set by NEPRA at $326.261 million, significantly lower than the $420.127 million petitioned by the project company. A review petition filed in August 2020 remains pending.
The Secretary of Power Division confirmed the arbitration outcome, though the Managing Director of the Private Power Infrastructure Board (PPIB) did not respond to inquiries.
This case highlights ongoing challenges in Pakistan’s power sector, emphasizing the need for prompt and effective resolution of tariff and project cost disputes to ensure investor confidence and sector stability.
Story by Khalid Mustafa
