2 min read
Pakistan is once again heading toward a major international legal battle as Saudi and Kuwaiti investors of K-Electric have issued a formal notice, warning of $2 billion arbitration over delayed tariffs, blocked subsidies and alleged interference in the company’s management. This fresh dispute adds pressure to the government as similar arbitration cases in the power sector have cost the country heavily in recent years.
The issue traces back to long-standing tensions between K-Electric’s foreign shareholders and the government over regulatory decisions. Investors say that despite repeated attempts to settle the matter, authorities failed to respond within the required period. The conflict deepened after the non-implementation of NEPRA’s 2025 multi-year tariff and prolonged delays in tariff differential subsidies, which they claim are pushing K-Electric into a liquidity crisis.
According to the notice sent by international law firm Steptoe LLP, the situation has now reached a point where arbitration is unavoidable.
“Our clients now intend to proceed to arbitration initiating arbitration has become necessary due to continued financial, regulatory and reputational harm,” the firm wrote.
The investors also objected to attempts to call a K-Electric board meeting and change the CEO, calling it a violation of Sindh High Court orders. They allege that government-nominated directors remained silent despite knowing what was happening.
If the government fails to appoint a representative for settlement talks, the investors will move to form an arbitral tribunal under the OIC Investment Agreement. For now, officials have not publicly confirmed whether any response has been issued.
This potential $2 billion claim could become the third major arbitration case in Pakistan’s energy sector, further straining the country’s financial and regulatory credibility at a critical time.
