ISLAMABAD: Resumption of talks between the government of Pakistan (GoP) and Dubai-based Etisalat may lead to resolving the much-awaited $ 800 million outstanding dues pending on account of privatisation of Pakistan Telecommunication Company Limited (PTCL), sources said on Wednesday.
According to sources in the telecom sector, Pakistan and the Dubai-based Etisalat are likely to resolve much-awaited $ 800 million outstanding dues on account of privatisation of PTCL as GoP and Etisalat talks may bear fruit this time around. They said the two sides have restarted talks and are likely to resolve the $ 800 million outstanding dues dispute.
Sources confirmed that a delegation consisting of Privatisation Commission Secretary, Finance Secretary, and Information Technology and Telecom Secretary will negotiate terms with Etisalat. Both sides are ready to reach a viable solution, they added.
“The government of Pakistan and Etisalat are likely to find middle ground to resolve pending dues of PTCL in recent talks,” said sources.
They added that scraping the clause, relating to deadline for the payment of the amount from the agreement, is causing hurdles in the recovery of the amount while the cash-starved government is all set to secure maximum from the talks while resolving the issue of pending dues of PTCL with Etisalat.
The sources also said that the finance starved government is leaving no stone unturned to materialise the outstanding $ 800 million on account of privatisation of 26 per cent shares of PTCL in the current fiscal year. However, there are little chances that Etisalat will be ready to clear $ 800 million outstanding dues.
It is also learnt that both, GoP and Etisalat, have firmed up their valuations of some 33 properties, which the GoP cannot transfer to PTCL due to various reasons. According to GoP this figures comes to around $ 92.4 million, meanwhile, Etisalat has not shared its valuation with GoP but according to information Etisalat’s valuations stands well over $ 450 million.
Earlier, the Senate Standing Committee on Information Technology and Telecommunication had recommended to the then prime minister Nawaz Sharif to personally intervene at the highest level with Dubai rulers for the early release of outstanding $ 800 million by Etisalat, pending on account of privatisation of PTCL in 2006.
Sources were of the opinion that the GoP had failed in fulfilling its obligation by not transferring properties to Etisalat under the agreement hence the case cannot be challenged in the court of law. Reportedly, as per the Share Purchase Agreement (SPA), the payment of the balance $ 1.2 billion was contingent upon the transfer of clean and clear titles of 100 per cent properties by January 2008.
In case of failure, valuations of the properties not transferred till January 2008 will be carried out by both the seller and the purchaser separately and the higher of the two valuations will be considered for deduction from the balance instalments.
At the time of privatisation of PTCL, there were a total of 3,248 properties to be turned in favour of PTCL. Of these, 3,215 have already been transferred leaving behind 33 outstanding properties that are non-transferable.
Privatisation Commission has had the properties assessed by three evaluators at different times. Hamid Mukhtar & Co was first engaged in 2009. Subsequently, National Bank of Pakistan was tasked in 2011 and lastly by M/s Iqbal Nanjee & Co in 2013.
The government wants that Etisalat should deduct the amount equivalent to 26 per cent shareholding, which, according to even Etisalat valuation, comes to around $ 125 million, leaving the remaining balance of $ 675 million free to be given to the government.
According to the agreement, after submission of valuation by both parties, Etisalat will pay the amount within seven days by adjusting the cost of non-transferable properties.
It is worth mentioning that Etisalat offered $ 2.6 billion, the highest among the three bidders. The second highest was China Mobile that offered $ 1.4 billion. The initial Sale Purchase Agreement (SPA) was signed in 2005, which was to mature in September 2005.
After seeing that its bid was higher, Etisalat indicated withdrawing its offer and agreed to proceed further only after it got major concessions. The then government had agreed to stagger the remaining $ 1.2 billion payments into nine bi-annual instalments, starting from September 2006 until September 2010. However, after paying $ 400 million, Etisalat has withheld the remaining $ 800 million.
