Pakistan, Etisalat move to resolve $800 mln sale proceeds dispute

A customer walks out of an Etisalat shop at the Dubai World Trade Centre in Dubai October 14, 2012. (Reuters)

• Two sides hit a stalemate after Pakistan failed to transfer properties from government to PTCL under privatisation bid
• Privatisation Commission expects valuation of 33 pending properties from Etisalat in the next few days

ISLAMABAD: Pakistani authorities are negotiating with the United Arab Emirates to resolve a decade-old dispute with Etisalat, an Emirates telecommunications company, involving a pending $800 million bill from the privatization of Pakistan Telecommunication Company Limited (PTCL), a senior government official said on Friday.
An Etisalat consortium bought a 26 percent stake in the PTCL for $2.6 billion in 2005 that gave the company majority voting rights. The UAE firm paid an initial $1.8 billion as per the deal terms, which also included transferring ownership of the properties to PTCL from the government.
But the Abu Dhabi-listed operator has since withheld $800 million after Pakistani authorities failed to transfer title of some properties to the PTCL as per the deal terms and conditions.
“We are now engaged with the Etisalat at the highest level and are expecting a valuation of the pending properties from the company in next few days,” Rizwan Malik, Federal Secretary Privatization Commission, told Arab News.
He said that this was for the first time since the dispute began that the Etisalat had agreed to share valuation of the properties. “Once we get the valuation, we can then negotiate further with the Etisalat to find out an amicable solution of the dispute,” he said.
The dispute between Pakistani authorities and the Etisalat has come down to 33 properties, whose titles could not be transferred to the PTCL due to ownership complications, according to the Privatization Commission. The PTCL’s asset management wing had mistakenly mentioned 3,384 properties in the privatization agreement that was finalized in 2006, though it only had 3,248 properties.
The government, which still has 62 percent stake in the PTCL, has now provided the list of all 3,248 properties to the Etisalat with reasons as to why the remaining 33 properties could not be transferred to the company.
“The value of the outstanding properties can be deducted from the $800 million that the Etisalat owes to the government of Pakistan,” the secretary said, “but let’s see how the Etisalat comes up with its proposal.”
Adviser to Prime Minister Imran Khan on Finance and Revenue Dr. Abdul Hafeez Shaikh was briefed on Thursday on issues related to transfer of the properties to the Etisalat and the pending payments.
He 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.
“The unresolved issues need to be decided at the earliest as any further delay was not in the interest of both the parties,” Shaikh said in a press statement. He had supervised the transaction structure of the PTCL’s majority shares but left the then government before its final agreement was signed.