Govt moves to settle sale proceeds row with Etisalat

 November 22, 2019

ISLAMABAD: Pakistan has offered the UAE-based Etisalat to deduct about Rs9 billion ($60 million) from its $800m outstanding sale pro­ceeds of the Pakistan Tele­com­munication Company Limited (PTCL) to settle a decade-old dispute.

Presiding over a meeting of an inter-ministerial committee on PTCL privatisation, Adviser to the Prime Min­ister on Finance and Rev­enue Dr Abdul Hafeez Shaikh directed the officials of the ministries of privatisation and information technology to ensure that a counter-offer from Etisalat is available within a week so as to finalise the proposals over the next couple of weeks.

Etisalat has held back $800m in PTCL sale proceeds for well over 13 years now. — Photo courtesy Khaleej Times
Etisalat has held back $800m in PTCL sale proceeds for well over 13 years now. — Photo courtesy Khaleej Times

Dr Shaikh had supervised the transaction structure of the PTCL’s majority shares but left the then government before its final agreement could be signed. Etisalat has held back $800m in PTCL sale proceeds for well over 13 years now, although it won 26 per cent shareholding along with management control of the then telecom monopoly for $2.6bn in June 2005.

An official of the Privatisation Commission told Dawn that the dispute between the government and Etisalat had come down to 33 properties whose titles could not be transferred in the name of PTCL. He said Pakistan had forwarded a valuation of about Rs9bn ($60m) of these properties to Etisalat. The valuation was duly verified by credible valuators and chartered accounts, he added.

The official said Etisalat had promised to come up with its own valuation by next week. “Both sides are keen to settle the issue at the earliest,” he said, adding that Etisalat had been offered to at least clear the undisputed payments and hold back a part of it, but the UAE-based firm did not agree and wanted settlement of the issue under the provisions of the agreement.

The sale deed required the dispute over properties to be settled through valuation of assets by both sides. In case of a difference, the valuation by Etisalat has the preference under the deed unless the matter is taken up for arbitration.

According to officials, Dr Shaikh said it was unfortunate that Etisalat had been dragging its feet on the settlement for 12-13 years and directed its earliest possible closure. It was also pointed out that the technical services agreement (TSA) of PTCL with Etisalat also did not have a legal life after it expired in 2011 and revised up to 2014. The meeting was informed that Etisalat had earned over Rs70bn (more than $450m at the current exchange rate).

Dr Shaikh “called for early resolution of all outstanding issues regarding the PTCL privatisation with Etisalat and asked the stakeholders to finalise proposals on the subject within the next couple of weeks”, said an official statement.

The meeting of the inter-ministerial committee, constituted by the prime minister, was attended by Minister for Privatisation Mohammad Mian Soomro, Minister for Information Technology Khalid Maqbool Siddiqui, secretaries of finance, privatisation and information technology and telecommunication and senior officials of the ministries concerned.

The PM’s adviser called for greater efforts to resolve the outstanding issues in a smooth and amicable manner and asked the government team to contact the senior management of Etisalat to listen to their viewpoint and decide the unresolved issues at the earliest as any further delay was not in the interest of both parties.

The meeting was informed that the PTCL’s asset management department had originally provided inaccurate and fundamentally flawed records on its properties as it owned 3,248 properties but mentioned 3,384 in the privatisation agreement finalised in 2006.

The government, which still had 62pc stake in PTCL, has now provided the list of all 3,248 properties to Etisalat with reasons why the remaining 33 properties could not be transferred to PTCL.

Etisalat had made upfront payments of $1.4bn in a couple of instalements but then stopped the remaining amount of $800m on the premise of non-transfer of all properties in the name of PTCL. Etisalat has now adopted a different stance, saying the number of non-doable properties was not 33 but 363 based on the list provided by the PTCL’s asset management department as part of the sale purchase agreement.

The properties could not be transferred in the name of PTCL because they were either partially owned, rented out, owned by the provinces but occupied by the federal government, or were not owned by PTCL in the first place.

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