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Govt wants SOEs disputes resolved through local arbitration

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10 months 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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It is anticipated that 150 ships would arrive at Gwadar by the year 2045, allowing the port to handle fifty percent of all imports.

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3 days ago

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In an effort to strengthen the port’s economic importance, the Federal Government has made the decision to direct fifty percent of all imports from the public sector to Gwadar Port.

By taking this action, which has the backing of the Special Investment Facilitation Council, the port’s financial situation is going to be improved.

The Cabinet will be presented with a summary of imports through Gwadar by the Ministry of Maritime Affairs, which will take place after Prime Minister Shehbaz Sharif’s recent trip to China.

When the next Cabinet Meeting takes place, Ahsan Iqbal, the Federal Minister for Planning, Development, and Special Initiatives, will examine the Chinese offer for the Karachi to Hyderabad Section of the ML-1 Project and bring it to the Cabinet.

Company preparations for the Shanghai International Import Expo, which will take place in November 2024, are being made by the Board of Investment and the Ministry of Commerce of Pakistan.

One of the most important aspects of the China-Pakistan Economic Corridor is the Gwadar port, which serves as a significant commerce route connecting China, the Middle East, Africa, and Europe. At this time, the Gwadar Port is able to accommodate two huge ships, and by the year 2045, it is anticipated that it would be able to handle up to 150 ships.

By developing the Gwadar Port, regional connectivity would be improved, employment will be created, and international investment will be attracted.

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The price of gold in Pakistan has experienced a significant surge.

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3 days ago

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Gold prices in Pakistan surged significantly on Thursday following two consecutive days of decline, with the price per tola rising by Rs2,000 to reach Rs262,100. This increase was in accordance with the downward trend in international market values.

The All-Pakistan Gems and Jewellers Sarafa Association (APGJSA) reported that the price of 10 grams of 24-karat gold rose by Rs1,714, reaching Rs224,708.

Conversely, the world gold market experienced an upward trajectory. According to the APGJSA, the global price of gold surged to $2,503 per ounce following a $22 gain during the trading session.

The local market experienced a significant decline in silver prices, decreasing from Rs50 to Rs2,900 per tola after a prolonged period.

The local market’s gold prices remain subject to the ever-changing dynamics of the international market, as well as domestic considerations such as currency exchange rates and domestic demand.

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The government has not met the deadline set by the International Monetary Fund (IMF) for the approval of a $7 billion loan.

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4 days ago

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On Tuesday night, there were virtual talks between representatives of the Finance Ministry and the IMF delegation, with the main topics being external finance and income generation.

According to people familiar with the situation, no date has been set for the IMF’s Executive Board to approve the loan despite the ongoing negotiations.

Officials from the Finance Ministry informed the IMF mission about the government’s initiatives to get outside funding during the discussions. Updates on loan rollovers and fresh finance commitments from allies were included in this. According to sources, the IMF has received a schedule, and loan rollovers are expected to be finished by the end of next week.

The $12 billion in debt must be rolled over before the loan can be approved by the Executive Board, according to the IMF mission.

In the virtual discussions, representatives of the Federal Board of Revenue (FBR) conversed with the IMF team over the revenue deficit. The FBR must reach its revenue goals for this month, according to the IMF mission. As a result, the IMF has asked the FBR to submit a thorough strategy outlining how it will close the gap left by the shortfall and guarantee that revenue goals are reached.

Apart from the conversations on outside funding, there are rumors that the Finance Ministry is actively holding talks with commercial banks in order to obtain new funding. According to reports, negotiations are taking place with four distinct sources for commercial loans, which are anticipated to support the government’s overall financial plan.

Finance Minister Muhammad Aurangzeb disclosed on Tuesday that the IMF was in favor of introducing targeted subsidies. He said that qualifying recipients might receive these subsidies through the Benazir Income Support Programme (BISP).

In order to guarantee consistency, the minister announced that this week’s talks with chief ministers will focus on implementing a similar policy across the country. He was having a casual conversation in parliament with the journalists.

In response to queries about outside funding, Aurangzeb revealed a $2 billion deficit and said that talks to close this gap are progressing. He stressed how crucial it is to obtain business loans.

He went on, “At this point, there’s a need to secure an agreement for commercial loans, not exactly their issuance,” emphasizing that debt rollover negotiations are nearing their conclusion and doing well. The minister expected that these developments would shortly be reported to the governments of allied countries by relevant authorities.

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