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Erdogan helps Pakistan escape huge penalty: PM Khan

With help of Turkish President Recep Tayyip Erdogan, Karkey dispute has been amicably resolved, says Pakistan’s premier

Aamir Latif   | 04.11.2019
Erdogan helps Pakistan escape huge penalty: PM Khan

KARACHI, Pakistan

Pakistan’s prime minister on Monday revealed that Turkey’s president helped Pakistan escape a huge penalty in a litigation involving a Turkish power company.

"PTI Govt, with the help of President Erdogan, has amicably resolved the Karkey dispute and saved Pak USD 1.2 billion penalty imposed by ICSID [International Centre for Settlement of Investment Disputes],” Imran Khan said in a Twitter post, in reference to a litigation between Pakistan and Turkish power company Karkey Karadeniz Elektrik Uretim (KKEU).

The KKEU was one of 12 rental power companies, which had been awarded contracts by the government in 2008-09 to meet the country's increasing power requirements.

According to daily Dawn, the company and the government were later locked in a dispute over alleged breach of contract by the former. The issue, however, was about to resolve after the KKEU assured to pay a fine of $18 million to Pakistan’s government apart from promising not to go to international arbitration, the daily said, citing country’s anti-corruption watchdog.

But, Pakistan’s apex court, following petitions from some politicians, struck down the agreement forcing the Turkish company to move to the ICSID in 2013, seeking compensation for the losses it incurred in terms of damage or depreciation.

The ICSID passed an order in favor of the Turkish company in 2017 asking Islamabad to pay $1.2 billion to the KKEU in compensation.

Khan did not give details about the help lent by the Turkish president to resolve the issue.

Khan had personally requested Erdogan to use his "good offices" to resolve the lingering dispute as Islamabad's ailing economy could not afford to pay such a hefty fine, a senior Pakistani Foreign Ministry official told Anadolu Agency on condition of anonymity due to restrictions on speaking to the media.

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