AGP Office Declines Involvement in Strategy for SHPL Award, Leaves Decision to CPPA-G and Power Division
ISLAMABAD: The Office of the Attorney General for Pakistan (AGP) has distanced itself from the strategy to handle the award of millions of dollars in favor of Star Hydro Power Limited (SHPL). This strategy was suggested by the foreign counsel engaged by the Central Power Purchase Agency (CPPA-G) and the Power Division, according to sources.
In a correspondence dated June 3, 2024, the AGP Office concurred with the strategy proposed by CPPA’s foreign counsel, Toby Landau KC and Tariq Baloch, in their advice from June 1, and requested the endorsement of the AGP’s Office to proceed. The final award in arbitration was issued against NTDC/CPPA-G on May 7, 2024. Although the Federation/GoP is not a direct party to the arbitration proceedings, non-payment of the arbitral awards against NTDC/CPPA-G could lead to further litigation invoking sovereign guarantees against the Federation.
The advice from the foreign counsel highlights several key points regarding the award and the potential success of challenging it before the United Kingdom High Court:
Para 9: SHPL is entitled to payments based on the COD tariff of Rs 10.3632/Kwh from November 8, 2017, until the end of the PPA. Damages owed to SHPL will be calculated based on the difference between payments made and what the arbitrator has determined they are entitled to from November 8, 2017.
Para 18: Despite imperfections in the award’s reasoning, courts outside Pakistan may interpret it as concretely awarding damages.
Para 105(a): Challenging the award in England carries risks, with few challenges succeeding historically. An English court may uphold the award, creating estoppels used in other PPA-related cases.
Para 105(d): Guarantee options could allow SHPL to bypass Pakistani courts and enforce the award against Pakistan’s assets abroad.
Para 106: It may be best to avoid wider public findings in the English court and instead seek a declaratory judgment from Pakistani courts, which could be used in consequential arbitration proceedings.
The AGP Office has no objection to CPPA’s decision to apply and implement the strategy proposed by foreign counsel. This involves not challenging the award, but rather initiating proceedings in Pakistan for a declaratory judgment that may be used in arbitration invoking the sovereign guarantee against the Federation.
The AGP Office maintains that since all power purchase agreements are endorsed by the Ministry of Energy (Power Division) and NTDC/CPPA-G without AGP’s involvement, it is up to the Ministry of Energy and CPPA-G to endorse and implement the strategy.
Story by Mushtaq Ghumman
