In a bourse filing, Kot Addu Power Company Limited has today informed all the relevant stakeholders that it has initiated an arbitration proceeding against Water and Power Development Authority Pakistan (WAPDA) and Central Power Purchasing Agency Guarantee Limited (CPPA-G) in Singapore under the arbitration rules of the International Chamber of Commerce.
The Government of Pakistan has also been made a party to the arbitration as it has issued a Guarantee and entered in a Facilitation Agreement with KAPCO.
The notice mentions that, “The arbitration has commenced pursuant to the Power Purchase Agreement (PPA) dated June 27, 1996 between the company and WAPDA. CPPA-G has been named as a respondent in its capacity as the current market operator and power purchaser implementing and administrating the PPA signed between WAPDA and the company.”
KAPCO via the arbitration proceedings seeks to backtrack the liquidated damages worth Rs. 27,727,118,565 imposed by WAPDA/CPPA-G in addition to that the company also seeks to “enforce its right to claim PKR 2,446,520,553 comprising the Company’s net losses not otherwise covered by the late interest payment.”
WAPDA and KAPCO had enetered in a 35 year power purchase agreement in 1996 under which electricit ygeenrated from multi fuel fired 1,660 MW capacity with fifteen geenrating units would be sold to a single customer (WAPDA).
Furthermore, on 10th of November 2017 Pakistan Water and Power Development Authority (WAPDA) – a majority shareholder in KAPCO – had rejected a request from KAPCO to acquire a 17.37 percent stake in Hub Power Company Limited (HUBCO) offered by the Dawood Hercules Corporation Limited at that moment. WAPDA held 40 percent of outstanding share capital in KAPCO. Under the articles of association KAPCO required a special resolution to process with the transaction under the provisions of Share Purchase Agreements.
KAPCO reported profits worth Rupees 4.395 billion for the half year ended December, 31st 2018 with earnings per share clocking in at 4.99 per share.