Karachi: Saudi and Kuwaiti investors holding a significant stake in K-Electric have initiated a $2 billion international arbitration against Pakistan, escalating a long-running dispute over regulatory actions, unpaid government dues, and a failed divestment of the country’s largest private power utility.

The arbitration was launched on January 16, 2026, with London-based law firms Steptoe International (UK) LLP and Omnia Strategy LLP filing a Notice of Arbitration under the OIC Investment Agreement and UNCITRAL Arbitration Rules. Pakistan has been named as the respondent.

The claimants include 32 Saudi individuals and entities linked to the Al-Jomaih family and five Kuwaiti companies, collectively holding a 30.7 percent indirect stake in K-Electric acquired during its 2005 privatisation. They have nominated Professor Stephan Schill as arbitrator and proposed the Permanent Court of Arbitration to administer the case.

Investors claim to have invested over $4.7 billion in Karachi’s power infrastructure, alleging their efforts reduced losses and saved Pakistan billions. The dispute centres on the stalled $1.77 billion sale of K-Electric to Shanghai Electric Power Company, which collapsed after years of regulatory delays.

Additional claims involve unpaid tariff subsidies, alleged political interference in tariff-setting, and breaches of investor protection obligations. The case is among the largest arbitration claims ever filed against Pakistan, raising concerns over investor confidence in the energy sector.