When it comes to closing billion-dollar deals, the track record of subsequent governments leaves a lot to be desired. To cite a few, the Reko Diq project remains mired in a costly dispute; the PSM sale was stopped in the tracks in what feels like eons ago; and PIA’s privatization has been looking pretty on paper under different governments. But it is the case of PTCL’s partial-privatization circa 2005 that remains the undisputed case study in the do’s and don’ts involving sale of national assets.
Nearly a decade and a half later, divestment of 26 percent management stake in PTCL to Etisalat under a $2.6 billion price-tag remains embroiled in a controversy over the outstanding dues of $800 million. The saga needs not reminding, but the chronology of this story now has a new entry. Reportedly, Etisalat has offered $275 million to Pakistani government in order to settle the dispute. A mere third of the amount owed.
The massive haircut is thanks to the roster of properties that were to be transferred in PTCL’s name but remains incomplete by about 33 properties. The fact that “real estate” has thrown spanner in the works, for a deal that was purely about telecommunications, reveals the length to which the then government went to save the deal when Etisalat started having cold feet right after bidding.
Instead of initiating the privatization process afresh, those who closed the deal back then chose to kick the can down the road, in an effort to continue the asset-sale drive in the mid-2000s. Those at the helm did not serve long enough to handle the fallout, and the following three governments were left to negotiate the matter with the Emirati firm whose intransigence was fed partly by the “brotherly” nature of Pak-UAE bilateral relations.
Now what? So much water has flown under the bridge that it probably does not matter much if the dispute carries on for another decade. If the settlement went ahead at the offered sum, there is no strong constituency that will raise hue and cry. At most, talking heads on nightly transmissions will highlight the “weakness” for a day or two and then move on to the next outrage. The fiscal czar, however, will be happy to get north of Rs40 billion in “non-tax revenues” that he so craves in keeping a tight fiscal lid.
However, in the interest of the future of privatization, this matter must be resolved such that the government retains its remaining credibility in the eyes of potential investors. That, of course, involves driving a hard bargain with Etisalat to raise its offer to a reasonable amount. Additionally, the final arrangement should involve an express commitment from Etisalat to invest more in Pakistan in the coming years so that the PTCL group regains its lost primacy in the local telecoms market.
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