ISLAMABAD: The JS Group has acquired 48% shares in Habibullah Coastal Power Company (HCPC), an independent power producer which has recently won a case in international court against Sui Southern Gas Company (SSGC) for the latter’s failure to ensure gas supply.
A senior government official told a national daily that the JS Group would also be a beneficiary of the Rs6 billion in damages won by HCPC in the international court of arbitration.
According to officials, negotiations for the stake acquisition continued for three years and a deal was finalised before the end of Pakistan Muslim League-Nawaz (PML-N) government’s tenure on May 31, 2018, reports The Express Tribune.
The JS Group had been close to then prime minister Shahid Khaqan Abbbasi as Ali Jehangir Siddiqui was made adviser to the prime minister and later appointed the ambassador to the US. His appointment as the envoy sparked controversy as he was summoned by the National Accountability Bureau (NAB) in different corruption cases.
JS Group spokesperson did not respond to a request for comment. HCPC is a joint venture between the Habibullah Group of Pakistan and El Paso Coastal Power Company of the US. A gas sale agreement between HCPC and SSGC is due to expire in September 2019.
SSGC is engaged in the transmission and distribution of natural gas to various consumers in the provinces of Sindh and Balochistan. The government of Pakistan has 73.15% direct and indirect shareholding in the company.
The federal cabinet, in its meeting held on June 5, 1995, while considering a summary submitted by the erstwhile Ministry of Petroleum and Natural Resources, approved allocation of 25 million cubic feet of gas per day (mmcfd) for a 140-megawatt combined-cycle independent power plant namely Habibullah Coastal Power Company, Quetta.
Of the 25 mmcfd, 21 mmcfd was to be supplied on a firm basis and the remaining 4 mmcfd was to be transmitted “as and when available basis”.
Until 2004, for the non-supply of gas on account of high domestic demand in Quetta during winter months, SSGC either paid the price differential for an alternative fuel in line with the contractual obligation or HCPC waived the price differential.
HCPC referred the matter of the absence of gas supply to the International Chamber of Commerce (ICC), Singapore, in January 2007 for dispute resolution in accordance with the terms of the gas sale agreement.
An ICC tribunal in its judgment upheld HCPC’s point of view and directed SSGC to pay damages to the power producer. Later, SSGC filed an appeal before the High Court of Singapore, seeking a ruling to set aside the penalty, but it was turned down.
HCPC again filed a request for arbitration under the ICC rules before the International Court of Arbitration in Singapore. The dispute was primarily based on SSGC’s failure to provide the allocated gas from December 2009 onwards.
Proceedings in the case were concluded in July 2017. According to officials, SSGC has now filed a review appeal in the court of arbitration. “Vigorous attempts have been made to defend the case,” said an SSGC spokesperson.
