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Govt wants SOEs disputes resolved through local arbitration

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1 year ago

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  • SOEs Act, 2023 to be amended to make local arbitration mandatory.
  • SIFC wants public sector entities to resolve issues locally.
  • SNGPL had shown intention to approach international forum. 

ISLAMABAD: The government wants all the state-owned enterprises (SOEs) to resolve their disputes through local arbitration rather than international, The News reported Monday. 

These entities will be directed to include all local arbitration clauses in their manual agreements, except in the case of international entities.

The State-Owned Enterprises (government and operations) Act, 2023 would be amended to make local arbitration mandatory between domestic SOEs and international arbitration, permissible only in agreements with foreign entities, with the prior permission of the government, a senior official of the Ministry of Law and Justice told the publication.

Earlier, the Special Investment Facilitation Council (SIFC) asked the law ministry to disallow public sector entities to approach international arbitration to resolve their disputes.

A dispute of Rs14 billion had come to the surface between Sui Northern Gas Pipelines Limited (SNGPL) and National Power Parks Management Company (NPPMC).

On August 7 this year, the Sui Northern notified NPPMCL of its intention to move international arbitration to recover the residual amount of Rs14.6 billion under its take or pay invoices for 2020 and 2021. This issue attracted the attention of SIFC, and then the supreme decision-making forum asked the ministry to amend the SOE Act and prevent both entities from moving international arbitration.

The law ministry has finalised the instructions to be issued to the SNGPL, NPPMCPL and Quaid-e-Azam Thermal Power Limited (QATAPL) to enter into a one-time arbitration agreement for local arbitration and the Arbitration Act 1940, as it can be done under a Section 17(1) of the State-Owned Enterprises (government and operations) Act, 2023.

Right now, the said entities have the forum of international arbitration in case of dispute as per their agreements between them.

Since all three entities are state-owned, the federal government cannot afford to pay the penalty in foreign currencies. It wants the resolution of SOE disputes should be attained through local arbitration.

Earlier in 2021, the SNGPL lost its claims of Rs19 billion against NPPMCL in two arbitrations before the London Court of International Arbitrations (LCIA).

NPPMCL owns and operates two 1,200 MW RLNG-based power plants in Punjab, situated in Haveli Bahadur Shah (Jhang) and Balloki, (Sheikhupura), and procures RLNG for power generation from the SNGPL.

The disputes appeared in May 2018 when SNGPL raised take or pay invoices against NPPMCL and proceeded to recover Rs10.37 billion from the gas supply deposit maintained by NPPMCL under its gas supply agreements. Disputing the SNGPL’s claims, NPPMCL contested the assertions of SNGPL on multiple forums and ultimately submitted the disputes for final resolution to LCIA.

The sole arbitrator issued its final awards related to these disputes earlier this week, holding the documents produced by SNGPL in support of its claims “little more than self-serving evidence”. 

The arbitrator also held that SNGPL wrongly drew down the amount of Rs10.37 billion and directed it to pay the same to NPPMCL with interest from the date of recovery until full payment, which amounts to Rs15.3 billion. 

In addition, the arbitrator dismissed the counterclaims raised by the SNGPL against NPPMCL, including an additional claim of Rs4.38 billion. It noted the SNGPL had failed to discharge “its burden of proving their quantum”.

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Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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2 days ago

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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2 days ago

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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3 days ago

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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