German envoy Alfred Grannas has reached out to Pakistan’s Chief of Army Staff, General Asim Munir, seeking assistance in renegotiating the contract termination for Siemens, which holds a 26% stake in Rousch Pakistan Power Limited (RPPL). The German government has expressed its refusal to accept the contract termination unless Pakistan agrees to six specific conditions, according to a report by the Express Tribune.
In his communication with General Munir, Grannas highlighted that Siemens’ long-standing partnership in Pakistan’s power sector is at risk, undermining investor confidence. The current settlement proposal involves RPPL transferring the power plant to the federal government for a nominal fee of $1, in exchange for Rs. 5.5 billion as early termination compensation and Rs. 2.8 billion for ongoing maintenance.
Siemens has outlined several conditions to address financial and operational concerns. These include assurances from Pakistan’s Finance Division and central bank to facilitate the smooth transfer of settlement funds, dividends, and other payments to German accounts before the plant’s handover. Additionally, Siemens seeks indemnity for its board members against future claims and tax liabilities, resolution of a sales tax dispute with Pakistan’s Federal Board of Revenue, and an immediate payment of Rs. 3.1 billion in outstanding dividends as a gesture of goodwill.
The German ambassador expressed concerns about the potential negative impact on Pakistan-Germany business relations, noting that repeated contract renegotiations since 2000 have prevented Siemens from realizing an adequate return on its investment in Pakistan.
