An $800 million saga refuses to end. It’s been a rigmarole trying to get Etisalat, which has the PTCL Group’s management stake since 2007, to cough up the dollars it owes to Pakistani government. Governments of both the PPP and the PML-N have previously failed in getting those dues back. That leaves the PTI government to resolve this point of bother with a friendly country, which has otherwise been generous lately.
News reports indicate that a delegation from Etisalat is due in the country later this month. Many such delegations have arrived in the past and returned with little progress – at least from a Pakistani government standpoint – on the matter. The resolution of this controversial transaction will be a litmus test of the incumbent government’s capability to conduct economic diplomacy with a weak hand.
It’s a weak hand because the drafters of the 2006 sale-purchase agreement allegedly didn’t exercise their fiduciary duties properly, landing the payment process in limbo years later. Those familiar with the PTCL privatization would recall that Etisalat had a change of heart soon after learning that China Mobile had only bid $1.4 billion for the 26 percent stake, as opposed to Etisalat’s $2.6 billion bid.
To save the deal, and with the rest of the privatisation agenda, the then Pakistani government led by Shaukat Aziz had to make compromises. The major concession that clinched the deal – and which was denounced by later privatization bosses – was to transfer over 3,000 properties in PTCL’s name. Was it a coincidence that payment of remaining $800 million has remained stuck on that very issue since 2008?
The two previous governments pursued the property-transfer matter and ended up transferring 90 percent of those properties in the company’s name. But it had to be all of the properties, as mentioned in the final deal. Luckily, for the buyers, the PTCL’s ownership claim of remaining properties was either contested (due to partial ownership) or downright non-existent, as some recent news reports suggest.
The erstwhile PML-N government argued that Etisalat should deduct the market value of those remaining, un-transferred properties and settle the outstanding amount. Differences over valuation of those properties, however, necessitated more delay. The dispute almost went quiet in 2017 and 2018.
But the story has gotten more complicated this year. Earlier this month, the Senate Committee on IT & Telecom was reportedly informed that some of the properties that were listed in the final privatisation deal by the then government did not even exist. It is not clear whether those properties were ghost properties or whether PTCL ought to have no claim over those properties. Either way, it weakens Pakistan’s case.
Inept bureaucratic capacity and inert economic diplomacy both made a multibillion transaction controversial. Hopefully, lessons would have been learnt. Now in its 12th year, it’s beyond time to resolve this saga for good. At stake is more than the $800 million, which will surely be a fiscal and monetary fillip. It is also about giving positive signals for privatization of other big-ticket entities in the future.
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