According to government officials, progress is being made on the $800 million payment outstanding from Etisalat to the Pakistani Government related to the purchase of a 26% share in Pakistan Telecommunication Corporation Limited (PTCL).
Etisalat had previously entered into an agreement in 2005 with the Pakistan government to acquire PTCL for a total of $2.6 billion which included the transfer of 3500 properties. However, due to non transfer of some properties to Etisalat under the agreement, it withheld $800 million, which was to be payed in six bi annual installments and instead only paid $1.8 billion. Pakistan has transferred 3,466 properties to PTCL under the agreement however, 34 properties still remain in PTCL’s possession. The properties could not be transferred due to ownership issues and therefore the value of these 34 properties will be deducted from the total payment due from Etisalat.
Progress Over 800 Million Dollar Dispute between Pakistan and Etisalat
“The government and Etisalat have each hired independent firms to assess the properties on their behalf and submit a valuation to HSBC, the holder of an escrow account relating to the disputed properties”
Azeem Qadir, a consultant for Pakistan’s Ministry of Privatisation
The government of Pakistan has already valued the properties at $92 million which means Etisalat could still owe the government a payment of $708 million.
The government of Pakistan is currently waiting for Etisalat’s valuation of the properties after which higher of the two estimates will be used to come up with a final settlement.
Recovering this amount is important to Pakistan as it makes an equivalent of 71.61 billion rupees which is more than the combined federal budget for health and education.
PTCL has been experiencing a constant decline in net profit and earnings per share (EPS). It had reported a net profit of 716.4 million rupees in the first quarter of 2015, net profit in the previous year was 4.4 billion which shows the fast decline.