Tuesday, 25 December 2012 15:13
ISLAMABAD: Etisalat has refused to accept the government of Pakistan’s proposal of valuing outstanding proprieties and deducting the amount from $ 800 million that the UAE-based group owes to the country, it is learnt.
Well-placed sources told Business Recorder that Prime Minister Raja Pervez Ashraf has taken a serious notice of undue pendency of the matter and has formed a task force comprising Finance Division, Privatisation Commission and Ministry of Information Technology to negotiate with Etisalat for an early settlement.
Etisalat is refusing to give $ 800 million that it owes to the government of Pakistan for privatisation of Pakistan Telecommunication Company Limited (PTCL) due to non-transfer of the properties agreed.
At the time of privatisation of PTCL, there were a total of 3248 properties to be mutated in favour of PTCL. Of these, 3117 have been transferred till date, leaving 131 outstanding properties. One hundred and eighty properties were transferred in 2010-11, while 131 properties are outstanding – 32 public and 99 private.
Sources said that of 99 private property holders, 20 have moved the court, which is said to have created hurdles towards smooth transfer of the remaining properties.
The government has proposed to Etisalat to value the remaining properties and deduct the amount from the final payment. However, Eitsalat has refused to accept the proposal on grounds that the value of outstanding properties is quite high and they should be handed over.
Prime Minister Raja Pervez Ashraf, in a meeting recently held with an Etisalat delegation led by Abdul Karim Ahmad Julfar, Group Chief Executive Officer, at the Prime Minister’s House, asked the company to clear the pending USD 800 million that it owes to the government of Pakistan for privatization of PTCL.
The Prime Minister suggested that Etisalat should nominate a team, to resolve issues.
The Privatisation Commission in 2004-05 advertised and marketed sales of 26% shares of PTCL along with management control. Twelve parties submitted their Statement of Qualifications (SOQs) and 9 parties were pre-qualified. Subsequently, three parties participated in the bidding process which was held on June 18, 2005. A consortium led by Etisalat emerged as the highest bidder – far above the reference price of Rs 62 per share approved by CCOP.
Etisalat offered $1.96 (Rs 117.01) per share at a total price of $2.599 billion, China Mobile offered $ 1.06 (Rs 63.48) per share with a total offer of $1.409 billion and Singtel offered $0.88 (Rs 52.54) per share with a total price of $1.167 billion. The CCOP approved the bid submitted by Etisalat being the highest and accordingly, a Sale Purchase Agreement (SPA) was signed in 2005 which was to mature in September 2005.
However, Etisalat International Pakistan (EIP) requested for certain modifications to the transaction structure and the SPA. Key modifications included (i) Staggered Payments (ii) Cost of Voluntary Separation Scheme (VSS) and (iii) 3248 Properties to be mutated in favor of PTCL with clean and clear titles.
The CCOP on January 4, 2006 approved the modification, after which a new SPA was signed on March 11, 2006. The Cabinet in its meeting held on April 12, 2006 approved the revised terms and conditions of SPA. Pursuant to the SPA executed on March 12, 2006 (‘SPA’) by and between Etisalat International Pakistan, LLC (‘EIP’) and the Government of Pakistan (GoP). GoP was required under clause 2.3 (e) of the SPA to provide clean titles of 98 percent of PTCL properties by 10 months from the date of execution of the SPA i.e. January 12, 2007 (First Threshold) and the remaining 2% by 22 month from the date of execution of the SPA i.e. January 12, 2008 (Second Threshold).
An upfront payment of $1.4 billion was made by Etisalat on April 12, 2006 against total bid amount of $2.598 billion. A balance of $1.2 billion was to be paid in 9 biannual installments starting from September 2006 and ending on September 2010. EIP, till date has paid a total sum of $1,799 million including three installments of $133.218 million each and withheld subsequent six installments totaling $800 million due to the non-transfer of remaining properties.
Later, a Ministerial Committee was constituted by the Prime Minister, consisting of Minister for Privatization, Minister for Finance, Minister for Interior, Minster for Petroleum & Natural Resources, Minster for Water & Power and Advisor to the Prime Minister on Information Technology. The Committee has held three meetings till date with its last meeting in August 2012 on the subject of transfer of properties. However, due to a lack of participation of the members, no meaningful decisions have been taken so far, sources revealed.