Gulf Investors Sue Pakistan for $2 Billion Over K-Electric Standoff

Saudi and Kuwaiti investors launched a massive $2 billion international arbitration case against the Government of Pakistan. The claimants, which include the Al-Jomaih family and five Kuwaiti firms, allege that Pakistan’s “contradictory and arbitrary” regulatory actions led to the collapse of a $1.77 billion sale of K-Electric to Shanghai Electric Power Company. The deal, first signed in 2016, was terminated by the Chinese giant in September 2025 after nearly a decade of bureaucratic delays and shifting national security requirements.

The legal filing, submitted under UNCITRAL rules, accuses the Ministry of Energy and NEPRA of “indirect expropriation.” Beyond the stalled sale, the investors are seeking recovery for unpaid government dues and subsidies dating back twenty years. They further claim that recent “confiscatory” tariff changes, which shifted returns from US dollars to Pakistani rupees, would drain Rs85 billion annually from the utility. Attorney General Mansoor Usman Awan confirmed that the government has 60 days to nominate its own arbitrator as it prepares a “robust counter-narrative” to shield the state.

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K-Electric issued a notice to the Pakistan Stock Exchange on January 21 clarifying that the company itself is not a party to the suit, which is strictly between the shareholders and the state. However, experts warn that this high-profile case, the first filed under the OIC Investment Agreement, could severely damage the Special Investment Facilitation Council’s (SIFC) efforts to attract new foreign capital to the energy sector.