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ISLAMABAD: Finance Minister Ishak Dar is seeking financial support in Abu Dhabi, including by selling minority stakes in state-owned companies listed on the stock market at negotiated prices.
On the first day of the visit, Mr Dar met with top executives of multi-billion dollar public sector entities – such as Abu Dhabi’s state holding company ADQ, International Holding Company (IHC) and Etisalat – to discuss their work in Pakistan investment opportunities.
Mr Dar’s visit is expected to last until Sunday, followed by Prime Minister Sheikh Baz Sharif’s visit to the United Arab Emirates shortly after taking office in April and asking the UAE leadership for a new loan of $2-3 billion.
The Prime Minister has been assured that the UAE’s leading SOEs and sovereign wealth funds will have the option to take a 10-15% stake in a listed company, with the option to buy back from the Pakistani government and have their nominees join the board as part of a professional business relationship instead of direct loan.
The UAE has been lending more than $2 billion to Pakistan since 2019, most recently in March, another year. However, the authorities have been seeking greater support given Pakistan’s limited foreign exchange reserves. When approached, Mr Dahl had no comment.
Things have not progressed since Mr Sharif’s visit on May 1, mainly because the Pakistani government was unable to get parliament to pass a proposed law that would allow the sale of stakes in state-owned companies through a negotiated government-to-government (G2G) basis.
For the same reason, similar proposals from Qatar have so far failed to materialize, save for the slow progress of Qatar Gas’s proposed LNG terminal near Karachi.
An official statement said Mr Dar met ADQ and IHC chief executives Mohammed Al-Suwaidi and Syed Basar in Abu Dhabi and discussed investment opportunities in Pakistan. The companies “expressed particular interest in investing in energy, agriculture, healthcare and other sectors,” the statement said.
Likewise, a delegation from Etisalat also met with the Minister of Finance and briefed him on its ongoing operations in Pakistan and future business plans. The company will hold the US$800 million proceeds from the sale of Pakistan Telecom Limited (PTCL) for 15 years. Pakistan is weighing the rollout of next-generation telecom licenses.
The government recently introduced a new piece of legislation in the National Assembly, the Intergovernmental Commercial Transactions Act 2022, to provide “mechanisms for conducting commercial transactions under the Intergovernmental Framework Agreement to facilitate, attract and encourage foreign ownership of the economy and Commercial Relations in Pakistan”.
This is to ensure an inflow of $2-3 billion from the UAE through the sale of shares in state-owned companies with debt, with the option to buy back these shares at a time Pakistan chooses, as the existing privatisation law does not provide for negotiated G2G deals and the UAE also reluctant to participate in the bidding.
The UAE already made a similar investment in Egypt earlier this year and hopes to replicate the experience in Pakistan.
Pakistan looks to ADQ, IHC and other companies such as Mubadala Investment Company and Abu Dhabi National Oil Company to invest in listed entities in its oil and gas sector.
However, while the Egyptian deal was completed in just one month, Islamabad authorities failed to make any progress in more than six months. The personnel changes of the Ministry of Finance further delayed the follow-up.
Mr Dar said last week that in addition to investment guarantees of about $20 billion, Pakistan has received about $13 billion in additional financial support from two traditional friends – about $9 billion from China and more than $40 billion from Saudi Arabia. One hundred million U.S. dollars.
Posted in Dawn, November 11, 2022
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