Sui Northern Gas Pipelines Ltd (SNGPL) lost claims of approximately Rs. 19 billion against National Power Parks Management Company Pvt. Ltd. (NPPMCL) in two arbitrations before the London Court of International Arbitration (LCIA).
According to the details, NPPMCL owns and operates two 1200 MW RLNG based power plants in Punjab, situated in Haveli Bahadur Shah, Jhang, and Balloki, Sheikhupura, and procures RLNG for power generation from SNGPL.
The disputes arose when in May 2018, SNGPL raised take or pay invoices against NPPMCL and subsequently proceeded to recover Rs. 10.37 billion from the gas supply deposit maintained by NPPMCL under its Gas Supply Agreements.
Disputing SNGPL’s claims, NPPMCL contested the assertions of SNGPL on multiple forums and ultimately submitted the disputes for final resolution to the London Court of International Arbitration (LCIA) as per the agreed mechanism under the Gas Supply Agreements.
The sole arbitrator issued its final awards related to these disputes earlier this week, holding that the documents produced by SNGPL in support of its claims “are little more than selfserving evidence.” The sole arbitrator also held that SNGPL wrongly drew down the amount of approximately Rs. 10.37 billion and directed SNGPL to pay the same to NPPMCL with interest from the date of recovery until full payment, which amounts to approximately Rs. 15.3 billion.
In addition, the sole arbitrator also dismissed the counterclaims raised by SNGPL against NPPMCL, including an additional claim of Rs. 4.38 billion, and noted that SNGPL had failed to discharge “its burden of proving their quantum.”
The final hearing for the LCIA Arbitrations initiated by NPPMCL took place from 20 September to 25 September 2021.
The hearing was attended by officials of NPPMCL and SNGPL and expert witnesses, including the renowned power sector expert heading AMA Energy Services, Mr. Abid Latif Lodhi, and gas sector expert, Mr. Mustafa Abdullah. NPPMCL was represented in the LCIA arbitrations by ‘Cornelius, Lane & Mufti, Advocates and Solicitors’ (CLM). The team from CLM comprised of Barrister Munawar-us-Salam, Barrister Waleed Khalid, Barrister Usman Akram Sahi, Barrister Faizan Daud, Amna Salam, and Asad Ullah Khan.
Update:
In a press release, the Sui Northern Gas Pipelines Limited (SNGPL) said that “misleading reports” are circulating regarding two arbitration awards involving SNGPL and NPPMCL.
“It must be noted that arbitration and awards are private and confidential. A selective and misleading disclosure has been made part of the awards. SNGPL will not violate the confidentiality commitment enshrined in the relevant rules, however, it has been constrained to respond given the ongoing speculation,” reads the statement.
It said that under the terms of the license granted to SNGPL by the Oil and Gas Regulatory Authority (OGRA) read with the decision of the Economic Coordination Committee (ECC) of the cabinet dated May 11, 2018, and in line with the tariff regime in vogue, the company after exhausting all the legal remedies available under the law, will take up the matter with the OGRA for determining the impact of the case in revenue requirement of the company.
“Since the Take or Pay revenues billed to NPPMCL were earlier offered to OGRA as an operating revenue, therefore, reversal of the same, if any, may not have any material adverse impact on the profitability of the company”, the statement added.
For the record, the arbitrations arose from a decision of an expert who was a retired Supreme Court Judge who had decided all issues in favor of SNGPL, it said.
Source: Pro Pakistani