Saudi and Kuwaiti investors in K-Electric have launched a $2 billion international arbitration case against Pakistan over regulatory intervention and unpaid government dues. The case also concerns the prolonged blockage of a major share sale.
The arbitration was initiated on January 16, 2026. London-based law firms Steptoe International (UK) LLP and Omnia Strategy LLP, acting for the investors, filed a Notice of Arbitration. The case has been brought under the Organisation of Islamic Cooperation Investment Agreement and the UNCITRAL Arbitration Rules. In addition, Pakistan is formally named as the respondent.
The claimants include 32 Saudi individuals and entities linked to the Al-Jomaih Group, as well as five Kuwaiti companies. Together, they hold a 30.7 per cent indirect stake in K-Electric. They have remained core shareholders since their privatisation in 2005. This was Pakistan’s first major power-sector divestment.
The investors have appointed Professor Stephan Schill as their arbitrator and proposed the Permanent Court of Arbitration to administer the proceedings. Meanwhile, Pakistan now 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 infrastructure over the past two decades. They claim these investments helped revive a loss-making utility. In addition, the investments reduced technical and commercial losses, and expanded generation and distribution capacity.
The claimants state that they have never taken dividends and instead reinvested all profits. Further, they estimate that their investment has delivered savings of more than $3 billion to the Pakistani exchequer. These savings resulted from improved efficiency and reduced losses.
The dispute centres on a 2016 agreement to sell 66.4 percent of K-Electric to Shanghai Electric Power Company in a $1.77 billion transaction. While the deal initially received support from Pakistani ministries and regulators, it remained stalled for more than eight years. The investors allege shifting regulatory requirements and conflicting official directives. In addition, they cite the failure to grant mandatory national security approvals as the factors that ultimately forced the Chinese buyer to walk away.
