KARACHI, Jan 31: There is no word as yet from the UAE telecom giant ‘Etisalat’ for payment of upfront $1.4 billion for acquisition of 26 per cent shares and taking over management control of the Pakistan Telecommunication Limited (PTCL) even after about four weeks of the decision of the cabinet committee on Jan 6.

With Prime Minister Shaukat Aziz in chair, the cabinet committee on Privatisation (CCoP) decided on Jan 6 to make further concessions for Etisalat on privatization transaction of the PTCL. The UAE company was asked to make an upfront payment of $1.4 billion after adjusting $260 million. The remaining payment of $1.9 billion has been staggered over about five years period. The company was asked to make payment in nine equal instalments after every six months.

Etisalat offered a bid of Rs117 a share for 26 per cent stakes in June 2005. It, however, failed to make payment of $2.3 billion by October 2005, even after it was given an extension in time. After a series of hectic parleys, in which President Musharaf also participated, the privatization commission (PC) worked out a deal which was approved by the CCoP. A cabinet minister Awais Leghari had then said that the deal would be finalized in next five weeks.

“There was no deadline set for making this payment,” a responsible and authoritative source in PC office in Islamabad informed Dawn by telephone on Tuesday. But he agreed that there is a ’slight’ delay in payment of money for the transaction made in June 2005. He attributed the delay to the extended Eid holidays in Pakistan and the death of the ruler in UAE.

“It is not only Etisalat that has to make payment,” another source in the PC explained and went on to add “We too have to do a lot for transfer of the management control of the PTCL to the highest bidder.” He indicated no time-frame as to when the PC and other relevant government agencies would be able to set in place the necessary legal and administrative infrastructure to facilitate the transfer of management.

With imbalance in international trade close to about $6 billion in last six months, Pakistan desperately needs $1.4 billion from this PTCL transaction so that the foreign exchange reserves kitty does not give a depleted look. The foreign exchange reserves have already started thinning down gradually and trade analysts predict that the trade imbalance for the entire 2005-06 will be close to $12bn by June next.

During the year 2004-05, the PC completed 11 transactions. These fetched a total of over Rs43 billion. The PC’s website shows an unpaid sale price of Rs28.71 billion with a mark up of Rs3.21 billion indicating a total unpaid sale price of Rs31.92 billion. Against this huge unpaid amount of money, the PC has made a provision of Rs1.20 billion for bad loans.

The auditors are said to have termed the provisioning of Rs1.2 billion and an additional provisioning of Rs519m as ‘inadequate’ maintaining that the ‘receivables are disputed by the buyers and there is a continued litigation for recovery of the dues.

Efforts made to obtain clarification and explanation from the Commission’s Secretary Tehseen Iqbal Khan proved unsuccessful. “I can not offer any explanation off hand,” he said and advised to contact Javed Ali Khan who was not available.