A consortium of Saudi and Kuwaiti investors in K-Electric has filed a $2 billion legal notice against the Government of Pakistan, marking a major escalation in a long-running corporate dispute.
The consortium includes Saudi Arabia’s Al Jomaih Group and Kuwait’s Denham Investments Limited. Both are among the primary foreign shareholders in K-Electric, Pakistan’s largest power utility. The investors claim that Pakistan breached international obligations by obstructing their business operations and failing to safeguard their investments.
The legal notice, dated October 20, was submitted to key government offices, including the Attorney General’s Office, the Prime Minister’s Office, and the Special Investment Facilitation Council (SIFC).
First Claim Under the OIC Investment Agreement
This case represents the first-ever claim brought against Pakistan under the Organization of Islamic Cooperation (OIC) Investment Agreement, a treaty designed to protect cross-border investments among member states.
According to the investors, Pakistan’s actions including delayed regulatory approvals, inconsistent government decisions, and prolonged interference have caused severe financial damage. The notice highlights that these issues violated Pakistan’s commitments to provide fair and equitable treatment under international law.
The $1.77 Billion Shanghai Electric Deal
A central issue in the dispute is the government’s failure to approve the sale of K-Electric to Shanghai Electric Power, a transaction valued at $1.77 billion. The deal has remained stalled since 2016 due to pending regulatory clearances.
The investors argue that repeated delays and shifting policy stances have reduced the value of their investment and undermined investor confidence. They assert that this prolonged inaction led to massive financial losses, which now total more than $2 billion.
Tariff and Payment Disputes
The legal notice also addresses tariff-related issues and payment delays, including unpaid subsidies and tariff revisions that K-Electric says have cost the company roughly Rs. 100 billion annually.
The investors accuse authorities of failing to release payments on time and of altering tariff structures in ways that eroded revenue. Such inconsistencies, they claim, made it impossible for the company to maintain stable operations and fulfill its long-term obligations.
Alleged Takeover Attempt Ignored by Regulators
In addition to financial concerns, the investors allege that a Pakistani businessman attempted an unlawful takeover of K-Electric’s parent company. They claim that the relevant regulators failed to act against the move, further damaging investor confidence and breaching the government’s duty to protect foreign ownership rights.
Invitation for Negotiation
Despite the sharp tone of the notice, the investors have invited Pakistan to engage in good-faith negotiations to resolve the matter amicably. However, they have reserved the right to pursue international arbitration if no satisfactory settlement is reached.
The 67-page document outlines “years of obstruction, inconsistency, and unfair conduct” and estimates total damages at no less than $2 billion.
This development could have significant implications for Pakistan’s investment climate, particularly at a time when the government is seeking to attract foreign capital through economic reforms and policy incentives.
The dispute underscores long-standing challenges in Pakistan’s energy and regulatory sectors, where delays and policy uncertainty often discourage foreign investment. How Islamabad responds to the notice will be closely watched by both investors and international arbitration forums.
