Halmore Power serves Notice of Arbitration

ISLAMABAD: M/s Halmore Power Company has reportedly served a Notice of Arbitration to the Minister for Power, Sardar Awais Ahmed Khan Leghari, under the Agreement between the Government of the United Kingdom and Northern Ireland and the Government of Pakistan for the Promotion and Protection of Investments, NewzShewz has reliably learnt.
According to sources, Yas Banifatemi, legal counsel for Mian Karim-ud-Din, sent the Notice of Arbitration to the Power Minister earlier this month.
The legal counsel attached the following documents with the letter:
(i) a Notice of Arbitration submitting the dispute between Mian Karim-ud-Din and the Islamic Republic of Pakistan under Article 8 of the bilateral investment treaty (BIT) between the UK and Pakistan;
(ii) a list of factual exhibits and legal authorities accompanying the Notice; and
(iii) a USB flash drive containing the exhibits and legal authorities, along with its password.
In December 2024, the legal counsel had earlier notified that Mr. Karim-ud-Din, a British national, qualifies as a protected investor under Article 1(c) of the BIT. He has made significant investments in Pakistan, protected under Article 1(a). Mr. Karim-ud-Din owns 225 MW Power Generation Company Limited, holding 99.9% of its shares. Halmore has operated successfully in Pakistan for the past two decades, contributing to the country’s electricity market.
In 2002, Pakistan introduced a new policy for power generation projects to attract foreign investment and address chronic electricity shortages. The policy offered several sovereign guarantees, including:
(i) a guaranteed rate of return on equity, and
(ii) government payment commitments not only for electricity supplied to the grid but also for available generation capacity — the “take-or-pay” model.
Following this, Halmore’s shareholders, along with other independent power producers (IPPs), were invited to invest in Pakistan’s energy sector. Halmore Power Company was incorporated on March 31, 2005, and received its Generation License on September 4, 2006. The company entered into several key agreements with Pakistan and its state entities, benefiting from guarantees provided under the 2002 policy. These included:
the Power Purchase Agreement with the National Transmission and Despatch Company Limited on April 28, 2007;
the Implementation Agreement with the President of Pakistan on October 23, 2007; and
a sovereign guarantee issued by the Government of Pakistan on April 30, 2008.
Under these agreements, Halmore constructed and began operating a 225 MW dual-fuel combined-cycle power plant in Sheikhupura, which commenced commercial operations on June 25, 2011. The project required an investment of nearly $100 million.
According to the notification, despite Pakistan’s commitment to a 30-year assurance period — lasting until June 24, 2041 — the government has gradually reneged on its obligations to some IPPs, including Halmore. In 2021, Pakistan compelled Halmore to accept a reduction in its guaranteed rate of return from 15% to 12%, resulting in an estimated financial loss of $52 million over the remaining term of the project.
The counsel further alleged that Pakistan has intensified efforts to forcibly revise energy sector arrangements, employing coercive tactics to extract concessions from private investors. The government has reportedly threatened to prosecute those who insist on the enforcement of their contractual rights.
These actions, according to the notice, have had damaging effects on the energy market. Several IPPs have been pressured into terminating their electricity supply contracts, as widely reported. Mr. Karim-ud-Din’s investments in Halmore have also suffered, as he and the company have faced persistent pressure to renegotiate tariffs and contract terms — undermining the guarantees that initially encouraged his investment in Pakistan’s power sector.
On November 11, 2024, Halmore’s CEO was allegedly summoned and threatened with detention unless Mr. Karim-ud-Din — who resides in London — authorized acceptance of pre-determined terms that could push Halmore toward bankruptcy. Although the CEO was later released, Pakistan has reportedly continued to pressure Mr. Karim-ud-Din to compromise his rights, putting both Halmore’s future and the safety of its personnel at risk.
The notice also highlights that Pakistan’s actions are discriminatory. While privately owned IPPs such as Halmore have been targeted, state-owned producers and those backed by Chinese investors have not faced similar treatment.
Mr. Karim-ud-Din has stated that if the dispute is not resolved amicably within three months from the date of the written notification, he reserves the right to submit his claim to international arbitration under Article 8(2) of the BIT to ensure full protection of his legal rights.
Meanwhile, the government has tasked the National Electric Power Regulatory Authority (NEPRA) with conducting a forensic audit of M/s Halmore. NEPRA subsequently published an advertisement seeking a consultant firm for the task. However, no update has been shared with the media so far.
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