Govt approaches Dubai rulers to get $800m

ISLAMABAD ( MEDIA )

Applying an out of the box solution, the government is expecting to get US$ 600 million out of the total US$800 million, due to be paid by Etisalat on account of PTCL privatisation, within a few months. The money has remained stuck for several years because of property disputes.

Sources said that Finance Minister Ishaq Dar has recently taken up the matter with the Dubai rulers as well as the top Etisalat management to press for the blocked payment.The Government of Pakistan is now aggressively pursuing the vital point, ignored earlier, that even if the disputed property is considered a loss to PTCL for which Etisalat has blocked US$800 million, the US$600 million has to be paid by the buyer to the government of Pakistan for its 74% share in the PTCL.

Etisalat, however, is of the view that all the provisions of the deal have not been implemented yet, which is violation of the agreement. It believed that all the provisions of the deal should be implemented first.

But the Finance Minister is quite optimistic that the government of Pakistan would soon retrieve from Eitsalat US$600 million. Presently, Dar is going through the post-angioplasty recovery stage for which he has been advised to take complete rest for at least two weeks. He intends to visit Dubai as soon as he is allowed to fly by his doctors to get this issue with Etisalat settled.

The government eagerly needs its money stuck with Etisalat to improve its foreign exchange reserves. According to official source, the government would even consider approaching the international court to get the GoP share from the blocked amount.

Etisalat had bought a 26% stake in PTCL along with management control at a price of $2.4 billion. However, it withheld $800 million on the grounds that grey traffic was hurting the company’s business and because of a dispute over transfer of 131 properties. During the recent months, almost 40 more properties have been transferred while the government is also committed to transfer other properties as per the PTCL privatisation deal.

There is however a dispute over Defence Housing Authority (DHA) property in Karachi, whose value is said to be in billions of rupees.Although the government is committed to get the promised properties transferred, it insists that even if the non-transferring of the properties is considered a loss, the Etisalat could only retain out of US$ 800 million its 26 per cent share.

“The properties have to be transferred to the PTCL, whose 74 percent shares are owned by the government of Pakistan,” the source explained. It is said that out of almost 3,000 properties, nearly 2,900 properties have already been transferred as per the privatisation deal. The Finance Ministry sources insist that the remaining properties would also be transferred.

Meanwhile a news report in a national daily only a few days back suggested that Etisalat is still insistent that it would not pay the $800 million it owes the government from buying a stake in the country’s state telecom operator until a property dispute is entirely resolved.The money owed, which dates back to last decade, would provide vital funds for Pakistan’s cash-strapped government, but it is said that Etisalat will not pay up until affiliate PTCL receives ownership of the remaining properties.

An Etisalat consortium bought a 26 per cent stake in PTCL for $2.6 billion in 2005 that also gave Etisalat majority voting rights. The UAE firm paid an initial $1.80 billion as per the deal terms, which also included transferring ownership of the properties to PTCL from the government. Etisalat was to pay the remaining $800 million it owed in six twice-yearly installments of $133 million, but has withheld payment as the transfer of some of these properties got delayed.

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