Pakistan mulls over taking Etisalat to international court
Company has not yet paid $800m in privatisation proceeds of PTCL
Company has not yet paid $800m in privatisation proceeds of PTCL. PHOTO: ARABIANGAZETTE
ISLAMABAD:
After remaining unable to resolve the matter amicably, Pakistan is considering taking Etisalat to the London Court of International Arbitration over non-settlement of $800 million worth of outstanding privatisation proceeds of Pakistan Telecommunication Company Limited (PTCL).
“The Ministry of Privatisation and the office of Attorney General of Pakistan have completed necessary consultations,” a top official of the privatisation ministry told The Express Tribune.
However, the official said before formally approaching the international court, a last chance would be given to the United Arab Emirates to resolve the issue on a government-to-government basis.
Privatisation Secretary Irfan Ali had sent a summary to former privatisation minister Daniyal Aziz, which contained both the options of using government channels and invoking the arbitration clause, said officials. However, Aziz did not clear the summary.
Now, the ministry plans to send the summary directly to caretaker Prime Minister Nasirul Mulk, who also holds the portfolio of privatisation minister, said the officials.
The ministry believes that it has a strong case to fight against Etisalat. But it is not yet clear whether the caretaker government will take a decision that will have far-reaching implications for the country or leave the matter for the next government.
The privatisation ministry believed that Etisalat would not easily cough up the money and the matter would have to be taken to the court, said the officials.
Etisalat had stopped the payment of $800 million to Pakistan on account of privatisation proceeds of PTCL. In July 2005, Etisalat bought 26% shares in PTCL with management control for $2.6 billion.
However, after coming to know that the second lowest bid stood at just $1.4 billion, the UAE-based company tried to backtrack from the offer.
Then privatisation minister Abdul Hafeez Sheikh lured the company by offering it to make an initial payment of $1.4 billion and pay the remaining amount in nine instalments until September 2010. Moreover, he committed to transferring the properties owned by PTCL to Etisalat.
Etisalat is withholding the dues on the grounds that Pakistan has not yet transferred titles of all properties.
Now, the issue of transfer of properties has become a stumbling block in the way of resolving the matter. Out of roughly 3,300 properties, about 33 cannot be transferred in the name of PTCL.
Pakistan served a second shortfall notice on Etisalat in September 2015, informing the company that it could not transfer the remaining 33 properties and it would have to pay the outstanding dues by adjusting the value of these properties, according to the privatisation secretary.
The privatisation official said Etisalat was deliberately delaying the valuation of these 33 properties.
Recently, the PTCL management also gave a presentation on the status of the properties to its board. The presentation confirmed that only 33 properties could not be transferred, said the ministry official.
After showing it as part of privatisation proceeds for years, former finance minister Ishaq Dar later excluded the outstanding $800 million from budget books.
The non-settlement of dues also delayed finalisation of the Privatisation Commission’s financial accounts for fiscal year 2013-14. The Privatisation Commission’s external auditor, KPMG Taseer Hadi & Co, has also raised the issue of outstanding receivables amounting to $799.307 million from Etisalat, according to minutes of the board meeting.
The matter was presented before the Privatisation Commission board that had constituted a three-member committee comprising Ashfaq Tola, Aziz Nishtar and Zafar Iqbal Sobani.
Some of the members were of the view that Pakistan should stop dividend payments to Etisalat. But the privatisation ministry was of the view that under the sale-purchase agreement dividends could not be stopped.
Published in The Express Tribune, June 8th, 2018.
After remaining unable to resolve the matter amicably, Pakistan is considering taking Etisalat to the London Court of International Arbitration over non-settlement of $800 million worth of outstanding privatisation proceeds of Pakistan Telecommunication Company Limited (PTCL).
“The Ministry of Privatisation and the office of Attorney General of Pakistan have completed necessary consultations,” a top official of the privatisation ministry told The Express Tribune.
However, the official said before formally approaching the international court, a last chance would be given to the United Arab Emirates to resolve the issue on a government-to-government basis.
Privatisation Secretary Irfan Ali had sent a summary to former privatisation minister Daniyal Aziz, which contained both the options of using government channels and invoking the arbitration clause, said officials. However, Aziz did not clear the summary.
Now, the ministry plans to send the summary directly to caretaker Prime Minister Nasirul Mulk, who also holds the portfolio of privatisation minister, said the officials.
The ministry believes that it has a strong case to fight against Etisalat. But it is not yet clear whether the caretaker government will take a decision that will have far-reaching implications for the country or leave the matter for the next government.
The privatisation ministry believed that Etisalat would not easily cough up the money and the matter would have to be taken to the court, said the officials.
Etisalat had stopped the payment of $800 million to Pakistan on account of privatisation proceeds of PTCL. In July 2005, Etisalat bought 26% shares in PTCL with management control for $2.6 billion.
However, after coming to know that the second lowest bid stood at just $1.4 billion, the UAE-based company tried to backtrack from the offer.
Then privatisation minister Abdul Hafeez Sheikh lured the company by offering it to make an initial payment of $1.4 billion and pay the remaining amount in nine instalments until September 2010. Moreover, he committed to transferring the properties owned by PTCL to Etisalat.
Etisalat is withholding the dues on the grounds that Pakistan has not yet transferred titles of all properties.
Now, the issue of transfer of properties has become a stumbling block in the way of resolving the matter. Out of roughly 3,300 properties, about 33 cannot be transferred in the name of PTCL.
Pakistan served a second shortfall notice on Etisalat in September 2015, informing the company that it could not transfer the remaining 33 properties and it would have to pay the outstanding dues by adjusting the value of these properties, according to the privatisation secretary.
The privatisation official said Etisalat was deliberately delaying the valuation of these 33 properties.
Recently, the PTCL management also gave a presentation on the status of the properties to its board. The presentation confirmed that only 33 properties could not be transferred, said the ministry official.
After showing it as part of privatisation proceeds for years, former finance minister Ishaq Dar later excluded the outstanding $800 million from budget books.
The non-settlement of dues also delayed finalisation of the Privatisation Commission’s financial accounts for fiscal year 2013-14. The Privatisation Commission’s external auditor, KPMG Taseer Hadi & Co, has also raised the issue of outstanding receivables amounting to $799.307 million from Etisalat, according to minutes of the board meeting.
The matter was presented before the Privatisation Commission board that had constituted a three-member committee comprising Ashfaq Tola, Aziz Nishtar and Zafar Iqbal Sobani.
Some of the members were of the view that Pakistan should stop dividend payments to Etisalat. But the privatisation ministry was of the view that under the sale-purchase agreement dividends could not be stopped.
Published in The Express Tribune, June 8th, 2018.