Pakistani Governments fail to recover outstanding $800 million from Etisalat

Three govts fail since 2006 to recover outstanding $800 million from PTCL buyer (Etisalat)

Islamabad (Daily Dawn Lahore / Khawar Ghumman / Monday, April 7, 2014) – Three successive governments, including the present one, have failed to recover $800 million outstanding payment from the buyer of the Pakistan Telecommunication Company Limited (PTCL) since April 2006.

Daily English DAWN LogoIn a written reply to a question raised by Dr Arif Alvi of the Pakistan Tehreek-i-Insaf, the finance ministry informed the National Assembly that the government was persuading Etisalat International Pakistan to release the much-needed foreign exchange.

According to Finance Minister Ishaq Dar, the issue obstructing the payment is transfer of the remaining 43 properties to Etisalat which had to be done by January 2008 as per the original agreement between the government and the buyer.

The government sold 26 per cent PTCL shares to the UAE telecom giant for $2.59 billion with management rights. Etisalat paid $1.799bn and withheld the remaining $799.3.4 million because of the governments’ failure to meet all conditions. Ironically, the governments have been showing the money yet to be recovered in federal budgetary estimates.

Under the share purchase agreement (SPA), the payment of the balance amount was contingent upon transfer of clean and clear titles of 3,248 properties by January 2008.

Etisalat complained that all properties had not been transferred in the name of PTCL.

The SPA was approved by the Cabinet Committee on Privatisation on March 11, 2006, and by the cabinet on April 11 the same year. Shaukat Aziz was prime minister at that time. But during the transfer process it was observed that some properties mentioned in the SPA were either under litigation or in possession of private parties and, therefore, could not be transferred.

The finance minister said the government had been vigorously pursuing the matter. He said the Privatisation Commission had complied with all applicable laws, including the PC Ordinance, 2000, and the Privatisation (Modes & Procedure) Rules, 2001, in a transparent manner.

Moreover, Mr Dar said, the PC (Confidentiality and Secrecy of Documents) Regulations 2003 prevented the government or any of its agencies from scrutinising or investigating the privatisation of an entity after one year of its completion.

Therefore, no inquiry has been initiated into this deal.

Arif Alvi said he was surprised to know about the SPA provision which had prevented the government from determining whether or not it was a fair deal.

“I agree that under the agreement the present government cannot do much about the SPA, but what about the government officials who apparently helped seal such an unfair deal because of which we are still waiting for our money,” he said, adding that the government should at least point out weak areas which had not been addressed at the time of PTCL privatisation and make them part of the official record for the purpose of future transactions.

Dr Alvi said the non-payment of such a huge amount for a long time which too against the sale of an organisation which was making profit when sold was a huge loss to the national kitty. “If the present government cannot hold an inquiry it should at least carry out a thorough study to ascertain what actually went wrong with the privatisation of PTCL,” he added.

Leave a Reply