Saudi and Kuwaiti investors, holding a 30.7% stake in Karachi’s K-Electric, have initiated a $2 billion international arbitration against Pakistan. The claim cites regulatory interference and unpaid government dues as key issues. The investors, comprising 32 Saudi and five Kuwaiti entities, have been stakeholders in K-Electric since its privatization in 2005.
The dispute stems from a 2016 agreement to sell a majority stake to Shanghai Electric Power Company. However, regulatory hurdles delayed the transaction for over eight years, leading to the withdrawal of Shanghai Electric. The investors also raised concerns about attempts by local investors to gain control of K-Electric through questionable means.
Moreover, the arbitration case highlights long-standing unpaid government dues, including tariff subsidies owed to K-Electric for nearly two decades. These outstanding payments have significantly impacted the company’s finances, with penalties imposed by the government for delayed payments. The investors allege that government actions, including interference in tariff determinations, have hindered the utility’s operations and potential sale.
