ISLAMABAD: Saudi and Kuwaiti investors in K-Electric have initiated a $2 billion international arbitration against Pakistan. The move escalates a long-running dispute over regulatory actions, unpaid government dues, and the blocking of a planned sale of the electric company.
The arbitration was initiated on January 16, 2026, when London-based law firms Steptoe International (UK) LLP and Omnia Strategy LLP filed a Notice of Arbitration under the OIC Investment Agreement and UNCITRAL Arbitration Rules, formally naming Pakistan as the respondent.
Dispute rooted in stalled sale and unpaid dues
The claimants include 32 Saudi individuals and entities linked to the Al-Jomaih family and five Kuwaiti companies. Together, they hold a 30.7 percent indirect stake in K-Electric and have been core shareholders since the company’s 2005 privatisation, according to Geo News.
According to the 39-page filing, the investors say they invested more than $4.7 billion in Karachi’s power infrastructure over two decades. They argue the investment revived a loss-making utility, reduced losses and expanded capacity, while delivering an estimated $3 billion in savings to the national exchequer. They also say they never took dividends, choosing instead to reinvest profits.
The dispute traces back to an October 2016 agreement to sell a controlling stake in K-Electric to Shanghai Electric Power Company for $1.77 billion. Although Pakistani authorities initially supported the deal, approvals were delayed for more than eight years. The investors say shifting regulatory demands and failure to grant clearances ultimately forced the Chinese buyer to withdraw.
Regulatory actions and arbitration claims
The arbitration also cites unpaid government receivables, including tariff subsidies dating back nearly two decades, which the investors say damaged cash flows. Furthermore, they allege state interference derailed a cabinet-approved mediation process in 2025.
The filing accuses authorities of politicising tariffs, undermining NEPRA’s independence and imposing changes costing K-Electric Rs85 billion annually. It also alleges failures to prevent hostile takeover attempts and improper offshore transfers.
The investors have named Professor Stephan Schill as arbitrator, while Pakistan has 60 days to appoint its nominee.
K-Electric investors sue Pakistan for $2bn over stalled sale, tariffs, unpaid dues and alleged regulatory breaches.
