Saudi and Kuwaiti investors in K-Electric have filed $2 billion arbitration against Pakistan over unpaid government dues, regulatory interference, and obstruction of contractual obligations caused severe financial losses.
The claim also states that more than $4.7 billion was invested in Karachi’s power system. The proceedings were initiated on January 16, 2026, under the OIC Investment Agreement and the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules.
On behalf of the investors, London-based law firms Steptoe International (UK) LLP and Omnia Strategy LLP filed the case on January 16, 2026.
The claimants, Saudi and Kuwaiti companies, collectively hold a 30.7% indirect stake in K-Electric and have remained cornerstone shareholders since its privatisation in 2005, Pakistan’s first major power-sector divestment. They have appointed Professor Stephan Schill as their arbitrator and proposed the Permanent Court of Arbitration to administer the case, while Pakistan has 60 days to nominate its own arbitrator.
According to the 39-page Notice of Arbitration, the investors say they have invested more than $4.7 billion in Karachi’s power sector over the past two decades, turning around a loss-making utility, reducing losses and expanding generation and distribution capacity.
They claim to have reinvested all profits without taking dividends, generating estimated savings of over $3 billion for Pakistan.
The dispute centers on a stalled 2016 deal to sell a majority stake to Shanghai Electric, which collapsed after years of regulatory delays. The investors argue the impasse and unpaid government dues amount to indirect expropriation under international law.
