After failing to amicably resolve outstanding dues of $800 million with the United Arab Emirates owned Etisalat, which controls the basic telephony giant, Pakistan Telecommunication Company Limited (PTCL), the government has decided to opt for other options to recover the amount during the next fiscal year.
An official source said that the Prime Minister Syed Yusuf Raza Gilani had set up a committee under the Finance Minister Dr Abdul Hafeez Shaikh to resolve the issue. He said that there was a dispute over only two percent of land titles transfer to PTCL as 98 per cent of land titles were already transferred to the company.
The incumbent finance minister was privatisation minister under the Musharraf regime that sold the PTCL for a record $2.5 billion to Etisalat in 2006. The company refused to honour the deal after bidding more than double the amount put forward by runner up China Mobile that gave a bid of $1.0 billion. The talks at the government level kept the deal intact and the government gave additional assurances to the UAE government owned company.
The government had kept the recovery of $800 million in dues in the budget for the current fiscal year. However, due to the resistance of Etisalat, the amount had been shifted in the budget for the next fiscal year. Due to the suspension of IMF programme, the authorities were faced with a serious decline in foreign inflows and had proposed that Etisalat should clear dues of 98 per cent of properties.
It was also noted that the company was noncommittal and the government had now decided to use other options to compel the company to make the payment. However, he did not elaborate on other options being pursued merely noting that the issuance of Long Distance International (LDI) licenses to other telecom operators would be issued after January 1, 2012. Under the revised agreement on the sale of PTCL, the government had given an assurance that it would not be issuing any new LDI licences to international telecom operators.
The cellular subsidiary of international telecom giant, China Mobile, Zong was a victim of the agreement that had delayed issuance of LDI license for several years. The source said that after the ending of the limit, the government would hold international auctions for the spared frequencies which under the agreement with Etisalat could be held only for the incumbent operators nationally.
The government had planned the auction for 3G telecom licenses in 2007 but later on shifted it to 2009. Initially it was planned that the incumbent six telecom operators would be allowed to participate in the auction but the experts had criticised the move, asking for open bidding to assure the best competitive prices. The government had set a figure of $1.0 billion from the auction of three 3G licenses.