Sui Northern Gas Pipelines Company wins international litigation against QATPL

· The London Court of International Arbitration (LCIA) has ruled in favour of Sui Northern Gas Pipeline Limited (SNGP) on its claim against Quaid-e-Azam Thermal Power (Private) Limited (QATPL).

· QATPL is wholly owned by the Government of Punjab. The company owns and operates re-liquefied Natural Gas (RLNG) based Combined Cycle Gas Turbine (CCGT) power plant of 1,183 MW generating capacity at Bhikki, District Sheikhupura – Punjab. The company has a 15-year gas sale agreement with SNGP, under which SNGP arranged RLNG at the plant site.

· To recall, QATPL had failed to purchase contractual quantities of RLNG for several months under the Take or Pay (ToP) agreement. As per the latest published accounts of SNGP, the company has recognized revenue from QATPL of PKR 10,367mn under this arrangement from July 01, 2017.

· Since SNGP had en-cashed the security deposits (PKR 3,265mn) held by it, and already recognized the revenue, this court ruling will not have a bottom-line impact on the company.

· However, this will improve the company’s cash flow position whereby QATPL has been directed to replenish SNGP as per contractual requirements.

Courtesy – AHL Research

 

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