Privatisation report fails to mention $800m in dues from Etisalat

UAE company has not transferred $799.3m, holds 407.8 million shares

Shahbaz Rana January 26, 2023
Photo: file


The Board of Privatisation Commission (PC), on Wednesday, endorsed a report that showed that receivables from privatisation stand at merely Rs5.2 billion – the special report, however, did not mention the Rs163 billion in receivables from the Etisalat.

The board endorsed the report, which was prepared by Crowe Hussain Chaudhury & Co Chartered Accountants firm as external auditors for the audit of the Privatisation Commission’s receivables as on June 30, 2022.

The outstanding dues speak poorly of the performance of the commission that already faces existential questions after the government enacted the new Inter-governmental Commercial Transactions Act 2022 deemed to carry out the sale of government assets on fast-track.

As per the report, about Rs5.2 billion were outstanding from 13 parties as on June 30, 2022, the PC Board was informed on Wednesday. Of the Rs5.2 billion, the maximum amount of Rs4 billion was outstanding against the Schon Group on account of privatising two entities decades ago. These include a principal amount of Rs494.4 million.

The report, however, does not mention the outstanding dues of $799.3 million on PTCL’s privatisation, which was surprising. PTCL’s outstanding dues against Etisalat had been mentioned in a previous receivable report, prepared during the tenure of the Pakistan Tehreek-i-Insaaf (PTI). When contacted, Iram Khan, Secretary Privatisation did not respond to a request for comments.

An official of the commission said that PTCL’s receivables will be mentioned in the audited financial accounts of the Privatisation Commission. This, however, does not absolve the commission for excluding the single largest liability from the receivable amount.

In July 2005, Pakistan had sold 26% of its holding in PTCL to Etisalat at a price of $1.96 per share. About 1.326 billion shares were sold at a total price of $2.6 billion. Since the past 12 years to date, however, Etisalat has not transferred $799.3 million and is holding 407.8 million shares without making due payments.

Since its privatisation in July 2005, PTCL has been declaring dividends and also claiming technical service agreement fees.

Etisalat is holding the $799.3 million due to the non-transfer of 31 properties. In 2019, Etisalat International valued the non-listing properties at Rs31 billion, but instead of taking the forex rate of Rs140 prevailing in 2019, it converted the amount of Rs31 billion at Rs62.75 per dollar rate of 2008, which came to $499 million.

The PTI era’s Receivable Committee had recommended placing the names of defaulters in the list of the Credit Information Bureau (CIB) and sending their cases to an anti-corruption watchdog. But nothing moved afterwards.

The privatisation programme started in 1991 and 142 entities have either been sold or had their shares divested in return of Rs649 billion. About 25% of the proceeds, however, remain outstanding. At the end of June 2022’s exchange rate, Etisalat owes Pakistan a whopping Rs163 billion.

The PC has extended favours to certain buyers by first adjusting their payments against the principal, which was contrary to general accounting and banking practice, and in other cases adjusted receipts against overdue mark-up. The Sale Purchase Agreements (SPAs), however, did not provide for any adjustment procedure.

The PC Board was informed that the government sold the National Fibres Limited to M/s Schon Group for Rs756.6 million. As on June 30, 2022, the receivable balance outstanding was Rs932 million, including the principal amount of Rs306.4 million.

The government had also sold Pak China fertiliser to M/S Schon Group for Rs457 million. As of June, last year, over Rs3 billion, including the principal amount of Rs188.2 million and interest computed at the rate of 14% on the outstanding principal amount, along with a further mark-up of Rs107 million on the outstanding mark-up amount was remaining. By June last year, an amount of Rs182 million was outstanding against Pak PvC Limited including a principal amount of Rs38.1 million. Similarly, the outstanding balance from Sindh Alkalis Limited was Rs141 million. The receivables from National Motors Limited stood at Rs82.3 million, Rs356 million from Balochistan Wheels Limited and Rs204 million from Dandot works of National Cement Limited.

The Haripur Vegetable oil industry owed Rs48.7 million and Crescent Factories Vegetable Ghee owed Rs106.5 million. The Siranwali Rice Mills is yet to pay Rs3.5 million and Quaidabad Wollen Mills Limited’s pending payment is Rs62.7 million.

Published in The Express Tribune, January 26th, 2023.

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