[governance] Pakistan to Takeover PTCL if Etisalat Fails to Pay $800 Million till June 2012

[Carlos A. Afonso]

... and the sky will fall on Pakistan if they do this, like it fell on
Argentina for taking over parasitic Repsol's majority stake in YPF.

frt rgds

--c.a.

On 04/19/2012 10:44 AM, Fouad Bajwa wrote:
> http://dawn.com/2012/04/09/pakistan-warns-etisalat-to-pay-800-million-or-face-hostile-takeover/
> 
> Pakistan warns Etisalat to pay $800 million or face hostile takeover
> 
> ISLAMABAD, April 8: Facing a serious financial crunch and fed up with
> Etisalat’s inflexibility in paying over $800 million in PTCL sale
> proceeds, Pakistan has asked the UAE-based firm to clear its dues
> before June this year or face hostile takeover of the country’s
> telecom giant by the government.
> 
> Sources told Dawn that the stern warning was conveyed a few days ago
> to a high-level Etisalat delegation visiting Pakistan. The delegation
> met a government team led by Finance Minister Dr Abdul Hafeez Shaikh.
> 
> The Etisalat delegation’s request for a meeting with Prime Minister
> Yousuf Raza Gilani was turned down pending resolution of the dispute,
> the sources said.
> 
> Keeping in mind Pakistan’s friendly relations with the UAE, the
> Dubai-based majority owner and operator of the country’s largest
> telecom firm has been told that it may keep a maximum of $150 million
> — more than double the value of a couple of problematic properties —
> but release the rest of the amount (slightly over $650 million)
> upfront.
> 
> Etisalat has held back $800 million in PTCL sale proceeds for well
> over five years now, although it won 26 per cent shareholding along
> with management control of the-then telecom monopoly for $2.6 billion
> in June 2005.
> 
> The Etisalat has been given a month to respond positively to the offer
> “because the true value of the money for Pakistan is in May” because
> Islamabad has to make a repayment of about $800 million to the
> International Monetary Fund. Non-payment will adversely affect foreign
> exchange reserves and impact Pakistan’s exchange rate negatively. The
> economic managers have been showing $800 million PTCL proceeds in
> their budget documents as financing items to bridge fiscal deficit
> that is expected this year to cross a whopping 7.5 per cent of the GDP
> owing to uncertainty over PTCL dues, auction of 3G telecom licences
> and disbursements under the Coalition Support Fund from the United
> States.
> 
> “Enough is enough” was the message conveyed to the Etisalat delegation
> in the presence of Finance Minister Shaikh.
> 
> “If we do not hear a positive response in a month, we shall make sure
> your flight does not land in Pakistan,” a furious participant was
> quoted to have told the guests. Moreover, the Etisalat would be banned
> from bidding in 3G telecom licences auction due in a couple of months
> to raise about $1 billion.
> 
> Prime Minister’s Principal Secretary Khushnood Lashari and Finance
> Secretary Abdul Wajid Rana who is also a government member on the PTCL
> board of directors were among those who attended the meeting. The
> strong position taken at the meeting, said the sources, had the full
> backing of the president and the prime minister.
> 
> The Etisalat’s top executive, the sources said, suggested appointing
> an independent auditor for the valuation of three properties and asked
> the government side to wait till its conclusion but this was rejected
> outright.
> 
> The sources said the finance minister told the delegation Islamabad
> was not asking for a mark-up on $800 million the Etisalat utilised for
> more than five years now but that it was unjustified to hold back such
> a big amount against three properties having a total value of less
> than $70 million. The properties are under the control of PTCL, but
> their titles cannot be transferred in the name of PTCL owing to legal
> complications.
> 
> Moreover, Pakistan has never disputed transferring property titles in
> the name of PTCL and was earnestly making efforts to overcome legal
> complications.
> 
> “They are ‘worthy foreign investors’ and some of us are overawed but
> this cannot go on indefinitely to the extent of compromising
> sovereignty,” a participant of the meeting said, adding that nobody
> ever talked about the non-payment issue with Etisalat as was taken up
> a week ago.
> 
> The unusual stern warning of an extreme threat came following a lot of
> top level persuasions from Pakistan for the recovery of PTCL dues over
> the last two years. The government had sold about 26 per cent shares
> along with management control of Pakistan’s largest telecom operator
> in June 2005 when Dr Abdul Hafeez Shaikh was privatisation minister in
> the Musharraf government.
> 
> Soon after becoming the finance minister in the PPP government, Mr
> Shaikh had taken up the matter with Sheikh Nahayan Al Mabarak, a
> senior UAE minister and owner of the Abu Dhabi group, for payment of
> the at least $500 million in June 2010 against transfer of about 98
> per cent of government properties. There were a total of 3,298
> properties that were required to be transferred to PTCL, of which all
> except only three are currently not in the name of the PTCL owing to
> legal complexities.
> 
> Later in February 2011, President Asif Ali Zardari also took a special
> visit to Dubai to seek the intervention of the UAE leadership for
> payment of $800 million that Etisalat owed to Islamabad for the
> country’s largest privatisation transaction — Pakistan
> Telecommunication Company Limited —, but in vain.
> 
> 

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