Pakistan Wins Rs. 1 Billion Damage Claim Against Chinese Energy Company

Pakistan has clinched a favorable ruling at an international court of a Rs. 1 billion liquidated damage claim against a Chinese energy conglomerate. The company had reportedly delayed renewable power projects, according to a report by a local media outlet.

The report stated that the London Court of International Arbitration (LCIA) issued its final awards related to a dispute between Central Power Purchasing Agency (CPPA-G) and Zonergy Company Limited earlier this week.

In the determination of the disputes between the parties, the sole arbitrator decided the required commercial operations date, “as agreed between the parties under the respective energy purchase agreements, represented a valid and binding obligation”.

“Consequently, CPPA-G’s imposition of liquidated damages for the power projects’ delay in achieving COD (commercial operations date) by RCOD (required commercial operations date) was justified,” the official said, citing the awards.

According to the report, CPPA-G and three subsidiaries of Zonergy approached the London Court of International Arbitration earlier this year to resolve their disputes under three identical energy purchase agreements signed between them in June 2015 to set up a 300-megawatt solar power project. Each solar independent power producer has the capacity to generate 100 megawatts of power.

The final hearing for the LCIA arbitration numbers (183,881, 183,884 and 183,885) initiated by the independent power producers took place from April 29, 2019, to May 3, 2019, in Islamabad. The sole arbitrator appointed by the LCIA issued his final awards in the LCIA arbitration on November 19, 2019.

The federal cabinet has approved a draft renewable energy policy, envisaging 20 percent share of clean energy by 2025 and 30 percent by 2030, up from around 4 percent currently. The government will soon convene a meeting of the Council of Common Interests to finalize the renewable energy policy.

Consequent to the expiry of RE Policy 2006 in March 2018, AEDB started working a new policy in view of the government’s decision to create a conducive environment supported by a robust framework for sustainable growth of the renewable energy sector, said the report.

London Court of International Arbitration has also ruled that the identical liquidated damage provision in the energy purchase agreements was legal and enforceable.