ISLAMABAD: In a blow to the government, the state-owned Pakistan LNG Limited (PLL) has lost a case in the London Court of International Arbitration (LCIA) on its arbitrary action to terminate the Operation and Services Agreement (OSA) with the PGP Consortium Limited that owns and operates the LNG terminal-2.
The Arbitral Tribunal appointed under the London Court of International Arbitration (LCIA) Rules, 2014, on April 26, 2023, issued its award in the arbitration between PGPC and Pakistan LNG Limited (PLL), declaring the termination notice issued by PLL on 14 October 2019 as void and illegal. The tribunal also went further by directing PLL to provide PGPC with a Stand-by Letter of Credit for US$21,481,272 as prescribed in the OSA.
Pakistan LNG Terminal Limited (PLTL) which later merged with PLL had terminated the agreement with PGPCL for not timely depositing a fresh credit rating guarantee equal to $10 million in cash or asset value of $15 million.
The PGPCL later on deposited the fresh required guarantee, but PLL refused to accept and maintained its decision to terminate the OSA signed with PGPCL. This prompted PGPCL, which set up the LNG terminal at the cost of US$176.5 million, to move LCIA which has now given the award in favour of PGPCL.
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