Islamabad: The ongoing dispute between Sui Northern Gas Pipelines Limited (SNGPL) and National Power Parks Management Company Limited (NPPMCL) has now reached the Prime Minister’s Office (PMO). The disagreement pertains to adjustments made by NPPMCL against SNGPL’s undisputed gas supply invoices, amounting to over Rs. 15.5 billion, as per an arbitration award issued in December 2021 by the London Court of International Arbitration (LCIA).
Background
SNGPL signed Gas Supply Agreements (GSAs) on a “Firm Take or Pay” basis with NPPMCL in 2016 for its RLNG-fired Balloki and Haveli Bahadur Shah Power Plants. However, disputes arose when NPPMCL adjusted the arbitration award amount against SNGPL’s invoices.
NPPMCL contends that the LCIA arbitration awards, upheld by the English High Court in February 2023, deemed SNGPL’s drawdown of Rs. 10.38 billion from gas supply deposits as illegal and ordered repayment with interest. NPPMCL claims the award was final, binding, and acknowledged in SNGPL’s financial records. Consequently, it adjusted Rs. 15.5 billion against outstanding invoices.
SNGPL’s Position
SNGPL disputes this adjustment, arguing that GSAs do not permit unilateral set-offs and that NPPMCL’s actions bypass legal procedures. It issued a notice of dispute in August 2024, seeking resolution through mutual discussions. When NPPMCL refused to acknowledge the dispute, SNGPL proposed arbitration under Pakistan’s Arbitration Act 1940 to avoid further international litigation. However, after NPPMCL’s continued refusal, SNGPL initiated arbitration proceedings under the GSAs on October 15, 2024.
SNGPL has appealed to the Petroleum Division for guidance on resolving the matter, emphasizing the need to save foreign exchange and avoid prolonged litigation.
NPPMCL’s Response
NPPMCL maintains that the issue was resolved through arbitration and upheld by courts, rendering further proceedings unnecessary. It asserts that reopening the case would be futile, as both entities are federal institutions under the same ministry. NPPMCL has expressed willingness to resolve any mathematical discrepancies in a commercially reasonable manner.
Current Status
The dispute has now escalated, with the PMO and Power Division involved in finding a resolution. NPPMCL has urged the government to intervene and prevent unnecessary litigation, stressing that SNGPL’s actions risk wasting resources and prolonging the matter unnecessarily.
As both parties prepare for arbitration, the disagreement highlights the challenges in inter-agency coordination and the financial implications of unresolved disputes between government entities.
Story by Mushtaq Ghumman
