Pakistan moves to resolve $250 million dispute with foreign investors over APL pipeline

The federal government has initiated efforts to resolve a growing dispute with foreign investors involved in Asia Petroleum Limited (APL) and three foreign investors, including one linked to US President Donald Trump. The dispute, which could potentially escalate to international arbitration, concerns a $250 million investment at risk due to halted payments for over 15 months, Dawn reported. 

The Economic Coordination Committee (ECC), chaired by Federal Finance Minister Muhammad Aurangzeb, has formed a high-level committee to negotiate an amicable settlement in the dispute.

The ongoing dispute revolves around Asia Petroleum Limited (APL), which owns an 82-kilometre furnace oil pipeline running from Port Qasim to the Hubco power plant. 

APL is a joint venture between Pakistan State Oil (PSO), holding 49%, and three foreign companies: US-based VECO International Ltd (12.5%), Singapore-based Infraavast Ltd (26%), and Kuwait’s Independent Petroleum Group (12.5%). Infraavast also holds a 45% stake in the Fauji Oil Terminal and Distribution Company (FOTCO).

Dawn cited sources as saying that APL Chairman Peter Leathard, linked to US President Donald Trump, has met with cabinet members, including Finance Minister Muhammad Aurangzeb, to express dissatisfaction over the government’s failure to make payments for over 15 months. He also raised concerns over the proposed $250 million mid-point oil port project at Hub, threatening to pursue international arbitration for cost recovery and penalties if the issue is not resolved.

The dispute centers around APL’s pipeline tariff and implementation agreement, which came into effect in 1996 and is set to expire in February 2027. The agreement stipulates a $32 million payment, with about $15.7 million due to PSO, the largest shareholder. After tax adjustments, the net amount payable to the three foreign investors stands at approximately $13 million over the next 13 months, even under a normal payment schedule, based on the sovereign guarantees for the pipeline. 

A cabinet member acknowledged that the dispute arose from poor judgment during negotiations with independent power producers (IPPs) but argued that the long-standing contract should not have become an issue after 29 years of smooth operation.

Foreign investors are demanding payment and have threatened to abandon a $250 million mid-point oil port project in Hub if the dispute is not resolved.

The issue came to light after the National Task Force on the power sector terminated contracts with five independent power producers (IPPs) in October 2025, including Hubco. The termination left the pipeline redundant, raising questions about the pipeline’s future and its potential role in a planned Aramco refinery. 

The ECC has now tasked a committee, including representatives from the petroleum division, finance division, law and justice division, and other stakeholders, to negotiate a settlement and secure the continuation of investments. The committee is expected to propose a resolution by January 31, 2026, aiming to prevent arbitration and ensure Pakistan’s credibility with foreign investors.