Korean Utility Refers India to Arbitration

South Korean utility Korea Western Power Company (Kowepo) has begun arbitration proceedings against India for not honoring a fuel supply commitment to a gas-based power plant that it part-owns in western India, Economic Times reported October 22 citing a government official.

The utility has sought resolution to the issue in six months or $400mn compensation for loss and damages, the newspaper said. The company is protected under India-South Korea bilateral investment treaty (BIT) and Comprehensive Economic Partnership Agreement (CEPA). Kowepo owns 40% of Pioneer Gas Power that operates a 388 MW project in the Raigad district of  the western Indian state of Maharashtra. 

The South Korean government has given its consent to invoke arbitration proceedings under bilateral investment treaties and CEPA, the official told Economic Times. 

Kowepo has said its investment decision on the power plant was based on the then legal and policy framework in India as well as statements and notifications made by governments and government affiliated agencies who painted a rosy picture of Indian natural gas sector and called for investments through their public statements. 

Due to a lack of gas, at present India has almost 25 GW of connected and commissioned, but currently idle, gas-fired power capacity.