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China & Pakistan face to face in International court: Scale tips in Pakistan’s favor

The London Court of International Arbitration (LCIA) has ruled in the favor of Pakistan in the dispute between the Central Power Purchasing Agency (CPPA-G) and Chinese energy conglomerate, Zonergy Company Limited.

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The London Court of International Arbitration (LCIA), on Saturday, ruled in the favor of Pakistan in the claims pertaining to 1 billion rupees worth of liquidated damages filed against a Chinese energy firm for delaying the projects undertaken for renewable energy.

The international court issued its final verdict with regard to the dispute between Zonergy Company Limited and Central Power Purchasing Agency (CPPA-G) last week.

LCIA Ruled in Pakistan’s Favor

In the course of the case pertaining to the dispute between the Chinese energy conglomerate and Pakistan’s CPPA, the sole arbitrator deliberated that the required commercial operates dates agreed between the two parties as part of the respective energy purchase agreements, “represented a valid and binding obligation.”

The official communique, circulating on media, stated, “Consequently, CPPA-G’s imposition of liquidated damages for the power projects’ delay in achieving COD (commercial operations date) by RCOD (required commercial operations date) was justified.”

The CPPA-G and the three subsidiaries of Chinese conglomerate Zonergy took the dispute to the London Court of International Arbitration earlier this year to settle their disputes under the clauses of three similar energy procurement agreements signed by the subsidiaries of Zonergy and the CPPA-G in June 2015.

As per the energy purchase agreements, it was agreed that Zonergy would set up 300 megawatts of solar power projects. Each independent solar power producer boosts the capacity to generate 100 megawatts.

Read more: Fawad Chaudhry: International companies soon to start production of solar panels in Pakistan

The concluding hearing for the LCIA arbitration numbers (183,881, 183,884 and 183,885) started by the independent power producers was scheduled from April 29, 2019, to May 3, 2019, held in Islamabad. On November 19, 2019, the sole arbitrator assigned by the LCIA issued his final awards in the LCIA arbitration.

The LCIA further stated that the similar liquidated damages provision in the energy procurement agreements was “legal and enforceable”. The court said, “Consequently, the sole arbitrator dismissed the entire claim raised against CPPA-G by the subsidiaries of Zonergy.”

The CPPA-G was represented by a team of experts, including Barrister Munawar Us Salam, Barrister Walled Khalid, Advocate Adil Umar Bandial, Advocate Ahmed Tariq, and Advocate Amna Salam from Cornelius, Lane & Mufti, Advocates, and Solicitors.

Renewable Energy Policy

Prime Minister Imran Khan’s federal cabinet has approved the draft of the new renewable energy policy, which aims for 20% clean energy by 2025, and 30% by 2030. Presently, the clean energy output in Pakistan is around 4%.

Reports suggest that the government will soon call a meeting of the Council of Common Interests to finalize the details of the renewable energy policy.

Read more: US warns Pakistan of risks from CPEC

After the 2006 renewable energy policy expired in March 2018, the Alternative Energy Development Board (AEDB) began formulating a new policy in light of the government’s agenda to establish a policy that envisages the creation of a conducive environment, powered with a vigorous framework that would ensure sustainable growth in the renewable energy sector.