PM steps in to resolve dispute with German power firm

Prime Minister Shehbaz Sharif has tasked Syed Tariq Fatemi, Special Assistant on Foreign Affairs, to address a dispute involving Rousch Power Limited and its German partner, Siemens, over a settlement agreement brokered by the Energy Task Force, led by Power Minister Sardar Awais Khan Leghari.

Business Recorder reported that the German Embassy’s concerns regarding the settlement were raised during recent Pakistan-EU talks, where the German Ambassador highlighted apprehensions over the deal. A letter from the German Embassy to the Power Minister underscored the long-standing involvement of Siemens in Pakistan’s power sector and flagged recent developments as alarming for the German business community.

Siemens is a key shareholder in Rousch Pakistan Power Limited (RPPL), an Independent Power Producer operating under agreements valid until 2031. 

The German side conveyed dissatisfaction with the settlement terms, particularly regarding currency transfer guarantees for dividends and settlement sums. Siemens requested guarantees from Pakistan’s Ministry of Finance and the State Bank to address these concerns.

The German Federal Foreign Office has also expressed concern, stating that unresolved issues could harm Pakistan-German business ties. Georg Klussmann, Head of Division for Pakistan at Germany’s Federal Foreign Office, emphasized that protracted delays risk eroding trust among German enterprises and investors.

Under the proposed settlement, RPPL would transfer its power complex to Pakistan for a nominal $1 (in PKR equivalent), receive Rs 5.5 billion for the OFME period due to early termination, and Rs 2.8 billion for maintaining the complex until the transfer is complete. However, Siemens described the settlement terms as unfavorable but remained open to negotiations.

The German government has called for Pakistan’s decision-makers to engage further to avoid jeopardizing future bilateral relations. Pakistan’s Charge d’Affaires in Berlin has recommended increased diplomatic efforts to reach a resolution acceptable to all parties.