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

[Fouad Bajwa]

Its gonna be crazy i tell you :) Some actions have far longer
implications. Its a setback attempt similar to many other cases
popping up. Trying to repay IMF loans without fulfilling commitments
doesn't really give any better results.

-- Foo

On Thu, Apr 19, 2012 at 4:14 PM, Carlos A. Afonso <ca at cafonso.ca> wrote:
> ... 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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