Payment Dispute With Etisalat To Be Resolved Soon

The government on Monday said Pakistan would resolve its issues with UAE telecom giant Etisalat soon and hoped that by March it would receive $800 million in arrears from the firm.

At a press conference here, the Minister for Privatisation, Waqar Ahmed Khan, said through value-addition the government would enhance the efficiency and competitiveness of state-owned enterprises to maximise earnings through privatisation.

“We want to realise maximum potential of the state-owned enterprises (SOE) by enhancing their cash value through value-addition, besides enhancing their efficiency and competitiveness for getting higher proceeds in the process of privatisation,” Waqar said.

Etisalat, which holds management control along with 26 per cent shares of Pakistan Telecommunication Company Ltd (PTCL), has withheld payment of $800 million to the federal government. According to Etisalat, the government has failed to transfer properties in the Punjab and Sindh to the new management.

In 2006, the government gave PTCL to the private sector and signed a deal with Etisalat for sale of 26 per cent shares at a cost of $2.6 billion along with management control.

Government officials say that so far about 93 per cent of the land has been transferred to the UAE company. According to the Share Purchase Agreement (SPA), the government was required to provide clear titles of 100 per cent of PTCL properties (3,384 in number) by January 12, 2008.

A balance of 161 non-transferred properties (including 71 in Punjab and 45 in Sindh) remains outstanding. Under this contract, the government agreed to transfer the properties before Etisalat made the full payment. Waqar Ahmed said in Dubai, London and the US he had fruitful discussions with reputed investment banks for their appointment as financial advisers.

At present, some 23 out of a total of 80 public sector enterprises (PSEs) are on the privatisation list and efforts are being made to include few more. The value of assets on the privatisation list is assessed at over 100 billion dollars and once the valuation process is completed, the valuation results would be shared with the investors as well as the nation.

He quoted the example of Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company Limited (OGDCL) and said according to the cash flow of both companies the value stood at 2.5 billion dollars, however, when market capitalisation is kept in view the value of these companies went up to 8 billion dollars. “If, we take, 10 per cent market cap while determining the value of such companies, these companies can fetch $25 billion,” he added.

The minister said this time the government had changed the procedure for appointment of financial advisors and this time they would bid for it as against the previous practice of direct appointment, adding that they would be paid their consultancy charges after completion of their transaction, as against the past practice of payment in advance.

He said strategic investors had a strong interest in Pakistan’s privatization programme and there were huge surplus funds available with the investors to invest in Pakistan. He said the Privatization Commission (PC) Board was being revamped and under the new transparency policy all four provinces would be given representation in the board as well as renowned jurists, journalists, bankers, academics and women would be included in the Board for transparent decision-making.

To avoid any government influence on decision making at the PC Board, he said, being the Privatization Minister, he had surrendered his right of vote and decisions would be taken by the board independently.

He defended the present policy of privatization of 26 percent shares along with management control to the investors and said at a time when global economic slowdown was having an impact on all economies, it would be difficult to attract investors for 51 percent share.

He said this policy would help realize more price of public assets as the private management would restructure and improve the efficiency of the public sector enterprises and it would increase the value of the government’s shareholding in such PSEs.

Via The News

© 2010, Telecom News Bulletin. All rights reserved.

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