ISLAMABAD ( MEDIA )
After years of struggle, Pakistan has finally decided to settle the dispute with Etisalat –the buyer of 26% shares in Pakistan Telecommunication Company (PTCL) – over $800 million outstanding payments by forgoing an amount equal to the value of those properties that it cannot transfer in the name of the company.
After holding a number of meetings over the last many months, Finance and Privatisation Minister Ishaq Dar and his team have reached the conclusion that out of the remaining 63 properties, two dozen of them can never be transferred in the name of PTCL, according to sources in the Ministry of Finance.
During a review meeting held in the finance ministry this week, the government agreed that there were two dozen properties that had changed many hands in the past decades and could not be transferred, the sources said.
These properties were in addition to those that were in litigation. The properties that are in litigation can be transferred once court cases are settled, according to officials of the finance ministry.
Pakistan has now proposed that Etisalat should give a minimum guaranteed amount in the next two months. The officials did not disclose the percentage of the amount but said it was much more than half the total of $800 million.
Etisalat’s board would meet by the middle of this month and consider Pakistan’s proposal to find a solution to the seven-year-old dispute, the sources said.
The government has proposed that PTCL should withhold only 26% of the value of these two-dozen properties, as the country holds majority shares.
Etisalat had placed a $2.6 billion bid for 26% shares in PTCL in 2006, which was about a billion dollar higher than the second highest bid, prompting the company to review its decision.
In order to keep the bid intact, the then government added a new clause to the agreement to transfer all PTCL properties in PTCL’s name. There were about 3,400 properties and all but 131 had been transferred.
In the last seven months, the PML-N government transferred another 68 properties while the handover of remaining properties was also in progress. It went to the extent of bearing the cost on account of property taxes and other fee.
The federal government has added $800 million to this fiscal year’s budgetary and foreign currency reserves’ projections and wanted to get any amount out of it before the close of the year.
While the government expects that it will soon reach an agreement with Etisalat, the dispute is not likely to be resolved in the foreseeable future. According to the PTCL sale agreement, in case of dispute over the value of the property, the highest valuation will be considered as the final price.
Both the parties will present their evaluations, according to Muhammad Zubair, Chairman of the Privatisation Commission with the status of Minister of State. For Zubair, agreeing to principles is more important than the numbers.
The government wanted to reach a conclusion in one to two months and was moving on a crash course basis with the help of provinces, said Zubair while talking to The Express Tribune. He said the commission was in contact with the provinces for early transfer of properties.
Published in The Express Tribune, March 8th, 2014.