KUWAIT CITY: Kuwait's state-owned Petrochemical Industries Co (PIC) said on Tuesday it has reached a final settlement with US giant Dow Chemical to pay around $2.2 billion as a penalty for scrapping a joint venture.
PIC said in a statement cited by the official KUNA news agency that the amount did not include $300 million of interest for delaying the payment awarded a year ago.
"The settlement stipulates that PIC pays the value of damages and costs as per the ruling of the International Chamber of Commerce (ICC) without the interest of $300 million," the statement said.
The US company said on its website that it has received the cash payment, which "reflects the full damages awarded by the ICC, as well as recovery of Dow's costs.
Last May, the ICC acting as an international arbitration granted Dow Chemical around $2.2 billion in compensation for Kuwait pulling out of the $17.4 billion venture.
"Dow and Kuwait share a long history, and payment of this award brings final and appropriate resolution and closure to the issue," Andrew Liveris, Dow chairman and chief executive officer said in a statement.
"Our partnership with Kuwait includes several industry-leading joint ventures, which are valuable assets in Dow's portfolio and have consistently returned accretive equity earnings to Dow," he said.
"Receipt of this award enables Dow to accelerate actions that are in line with our stated priorities for uses of cash - foremost of which is paying down debt and remunerating shareholders," Liveris said.
In December 2008, the Kuwaiti government scrapped the deal between PIC and Dow to create a petrochemicals joint venture due to pressure from opposition MPs citing the global financial crisis.
Under the deal, PIC was to pay $7.5 billion to form a petrochemicals firm known as K-Dow.
The parliament elected in December has asked its public funds protection panel to investigate the implications of signing and then cancelling the deal with Dow. The panel has not yet completed its probe. (AFP)
