• Sets aside SHC orders allowing contractor to claim price escalation beyond agreed terms • Orders completion of remaining work under original contract ISLAMABAD: The Federal Constitutional Court (FCC) on Monday set aside a series of Sindh High Court (SHC) orders in the long-delayed Nai Gaj Dam dispute and directed the contractor to complete the remaining work strictly in accordance with the original contract, the arbitral award and the Sept 21, 2021 memorandum of understanding (MoU). The SHC judgements had allowed the contractor, NEIE SMADB-LILLEY-RMS Karachi, to claim price escalation beyond the agreed terms. A two-judge FCC bench, headed by Chief Justice Aminuddin Khan and also comprising Justice Ali Baqar Najafi, heard a set of appeals and expressed the expectation that all parties, including the contractor and Wapda, would honour their commitments and complete the project in accordance with the original contract. To ensure uninterrupted execution of the project, the FCC also ordered that no judicial proceedings or intervention by any court would be permissible until completion of the dam, except in accordance with the dispute resolution mechanism contained in the original contract. The clear object of this direction is to prevent further litigation from impeding the execution of an important public infrastructure project, the court emphasised in its 21-page judgement. The FCC directed Wapda to consider and decide, within 15 days of receiving any request from the contractor expressing its unequivocal willingness to resume and complete the project strictly in accordance with the original contract agreement, the arbitral award and the MoU. While deciding such a request, Wapda will assess the nature and extent of the remaining work and determine a reasonable extension of time strictly under the contractual provisions governing extension of the construction period. However, the FCC made it unequivocally clear that any extension of time would not entitle the contractor to any further escalation of the contract price, additional compensation or any other financial benefit beyond that already crystallised and finally determined under the arbitral award, the decrees of the competent court and the MoU. Conversely, if the contractor fails to submit such a request within the stipulated period or declines to execute the remaining work strictly in accordance with the contract, arbitral award, decrees and MoU, Wapda will be at liberty to re-tender the remaining work on a risk-and-cost basis in accordance with the law and the terms of the contract. Located on the Gaj River near the Kirthar Mountain Range in Dadu district, the Nai Gaj Dam is a public infrastructure project of immense national significance. The FCC noted that the project was conceived to provide irrigation facilities to the rain-fed plains of Kachho and Kohistan, augment water supply to Manchar lake, generate around 4.2MW of hydroelectric power and bring nearly 28,800 acres of agricultural land under cultivation. The dam is also critical to the environmental restoration of Manchar lake, which has suffered severe ecological degradation because of reduced freshwater inflows, agricultural runoff and pollution. The FCC recalled that the Supreme Court had monitored the lake’s condition through suo motu proceedings in 2010, during which the completion of the Nai Gaj Dam was identified as vital for ensuring a regulated freshwater flow into the lake. The project, however, became embroiled in litigation soon after its commencement in 2012. The contractor was awarded the contract after submitting a bid of Rs38.79 billion, but the project suffered severe delays. Serious irregularities were later discovered in the performance guarantees submitted by the contractor. In its judgement, the FCC observed that the Nai Gaj Dam was not a private commercial venture but a major public infrastructure project intended to serve significant public purposes, including irrigation, rehabilitation of Manchar lake, agricultural development and water conservation. Published in Dawn, July 14th, 2026