Pakistan will not pursue arbitration against UAE-based telecoms group Etisalat over an outstanding payment of USD800 million related to the company’s purchase of a 26% stake in state-owned firm Pakistan Telecommunication Company Ltd (PTCL), as such action would have a negative impact on bilateral relations between the UAE and Pakistan, Chairman of the Privatisation Commission (PC) Muhammad Zubair said whilst briefing the Senate Standing Comitte on Information Technology and Telecommunication. Teleco Alert cites Mr Zubair as saying that, following a meeting with Etisalat earlier this month, he believes that it is unlikely that the company would sanction the release of the USD800 million payment, bearing in mind PTCL’s profitability and share price.
Under the 2006 share purchase agreement, Etisalat agreed to pay USD2.6 billion for the 26% stake over a five-year period, with the final payment dependent on the transfer of some 3,248 properties to PTCL. Should the government fail to transfer the properties, it was agreed that the value of the outstanding property would be deducted from Etisalat’s final payment. In the event, the state encountered a number of legal obstacles and was unable to complete the transfer, with 33 of the promised properties now outstanding and deemed non-transferable. For its part, Etisalat has flatly refused to pay the final USD800 million, repeatedly stating that it will not do so until all of the disputed properties are transferred to PTCL. The group has also disputed the government’s valuation of the outstanding properties, claiming them to be worth closer to USD400 million that the state’s assessment of around USD90 million.
In a bid to break the near decade-long impasse – Etisalat ceased making its payments in late 2007 – the senate committee recommended that PM Nawaz Sharif personally intervene at the highest level with the UAE government. The senate also decided that it would invite representatives from Etisalat to present their side of the case to the committee directly. Several senators, meanwhile, sought stronger action, calling for the government to take action against those responsible for mishandling the privatisation deal in 2006. Further, it was argued that the National Accountability Bureau’s (NAB’s) investigation into the matter should be made public.