Pakistan’s energy regulator has launched a forensic audit of Halmore Power Company Limited, escalating a long-running standoff over the company’s Power Purchase Agreement (PPA).
Background of the Dispute
Halmore Power, which runs a 225 MW dual-fuel plant in Sheikhupura, was set up under the government’s 2002 power policy. That policy aimed to draw private investment into the energy sector by offering sovereign guarantees—covering both returns on equity and capacity payments. The plant began commercial operations in 2011.
The company argues, however, that the government has failed to honor commitments, including a 30-year agreement that was supposed to run until 2041. A major flashpoint came in 2021, when authorities forced a downward revision of Halmore’s guaranteed return from 15% to 12%, a move the company says wiped out around $52 million in projected earnings.
Nepra’s Next Step
With negotiations over the PPA stalled, the National Electric Power Regulatory Authority (Nepra) has now hired an external firm to conduct a forensic audit of Halmore’s accounts. The decision follows repeated attempts by Nepra to secure data from the Power Division, including a letter dated August 9, 2025, which officials say went unanswered.
Junaid Altaf Bhatti, Nepra’s Deputy Director, confirmed that the regulator had reiterated its request for the missing information, citing “unjustified delays” in compliance.
Legal Front: Bilateral Treaty Claim
The dispute has also taken on an international dimension. In December 2024, Halmore’s majority owner, British national Karim-ud-Din, formally invoked protections under the UK-Pakistan Bilateral Investment Treaty (BIT). Holding 99.9% of the company, Karim-ud-Din argues that Pakistan’s actions violate investment safeguards enshrined in the treaty.
Why This Matters
The case highlights the broader challenge Pakistan faces in balancing investor protections with the financial strain of power sector subsidies and capacity payments. Dozens of independent power producers (IPPs) operate under similar agreements, many of which have come under scrutiny as the government struggles with circular debt.
Nepra’s audit of Halmore is likely to serve as a test case: its findings could influence how future disputes with foreign-backed power producers are handled, and whether Pakistan risks further claims under international investment treaties.
