ISLAMABAD: The government has spent over Rs2 billion to win a case in the international court over the acquisition of assets of Progas Pakistan Limited - a fully integrated liquefied petroleum gas (LPG) company - worth Rs2.3 billion.
However, the court, while announcing its ruling, ordered petitioners to pay Pakistan $12 million (Rs1.3 billion) in legal expenses, meaning the government had to eventually pay less than Rs1 billion.
State-owned public utility Sui Southern Gas Company (SSGC) had bought assets of Progas in an auction conducted by banks at a price of Rs2.3 billion during the 2008-13 tenure of the Pakistan Peoples Party (PPP)-led government.
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However, Progas shareholders filed a case in the International Centre for Settlement of Investment Disputes, blaming Pakistan government’s intervention in the market for their business failure.
They invoked the Bilateral Investment Treaty and made damages claims of $573 million against Pakistan. The court gave the verdict in favour of Pakistan last year as well as ordered the petitioners to pay the country $12 million (Rs1.3 billion) in legal expenses.
Pakistan government paid Rs2.25 billion to a UK-based law firm to win the case, which was almost equal to the value of Progas assets.
Now, Progas shareholders have challenged the arbitration ruling in a London court and the government may be forced to spend more on the case. The shareholders are now banking on new investigation conducted by the National Accountability Bureau (NAB) into the acquisition of Progas assets.
Progas had set up an LPG terminal in Pakistan in 2004, but it was shut down in 2008. Following failure of the business, the company filed two claims against Pakistan in London, holding its government responsible for the loss.
Ali Allawi, the UK-based major shareholder in Progas and brother of a former prime minister of Iraq, filed a damages claim of $70 million and other claims amounting to $503 million were filed by Progas.
The petitioners claimed that Pakistan government had interfered in LPG price movements from 2004 to 2008 and made their business unviable. In order to recover the money borrowed by Progas, banks auctioned its assets in 2011, which were bought by SSGC on directives of the government.
Ex-prime minister Shaukat Aziz and former petroleum minister Usman Aminuddin, who were holding these portfolios during the Pervez Musharraf government, and officials of the Oil and Gas Regulatory Authority, SSGC and Port Qasim Authority appeared before the international court as witnesses and were also cross-examined.
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After three years of hearings, the court dismissed the case against the government of Pakistan and ordered the petitioners to pay $12 million for legal expenses.
In January 2013, the NAB Karachi had started an investigation into the conduct of SSGC officials involved in the purchase of Progas terminal at Port Qasim in the auction conducted by the Sindh High Court. After years of probe, the inquiry was closed on the recommendation of NAB Karachi.
However in May 2016, a re-investigation was approved by NAB Islamabad on the grounds that new information about ex-SSGC MD Azim Iqbal Siddiqui had surfaced, but no such evidence was presented.
Published in The Express Tribune, January 2nd, 2018.
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