Pakistan has secured financial relief of more than USD 27 million after successfully negotiating down contractor claims in a major cross-border electricity transmission project linking Central Asia and South Asia.
The Engineering, Procurement and Construction (EPC) contractor, a joint venture of Hitachi Energy and Cobra Instalaciones y Servicios, had initially demanded care and custody charges of around USD 32.9 million for Pakistan and USD 28.5 million for Tajikistan.
A high-level meeting held on March 9–10, 2026, in Ludvika, Sweden, led to a successful outcome for Pakistan. The country’s delegation included senior officials from the Ministry of Energy (Power Division) and the National Grid Company.
Following negotiations, the parties agreed to cap total care and custody expenses at USD 9 million for both Pakistan and Tajikistan combined, covering the period up to February 2028. This adjustment significantly reduces Pakistan’s financial burden while ensuring the maintenance and operational readiness of key high-voltage direct current (HVDC) infrastructure during the project’s delay.
The agreement also allows for a limited extension of up to three months beyond February 2028, if needed, with a 5% monthly cost escalation.
The project, designed to facilitate electricity trade between Central and South Asia, has faced delays due to geopolitical instability in Afghanistan. As a result, commissioning of the HVDC system is now expected by September 2027, making interim care and custody arrangements necessary to preserve critical infrastructure.
