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Islamabad:
During a visit to the United Arab Emirates (UAE) this week, Prime Minister (PM) Shehbaz Sharif’s to-do list topped the request for an extension of the maturing US$2 billion in debt, alongside a proposed 10-12% stake in a government-listed company Still in its infancy.
Government sources told Tribune Express that the coordinating committee set up in preparation for the prime minister’s visit on Tuesday reviewed the list of entities that could offer investment to the UAE, including Pakistan Telecom Limited (PTCL).
However, almost all decisions have been postponed to the prime minister for review, including PTCL, as disputes over $800 million in previous privatizations remain unresolved. There was also opposition to another proposal that would see the Qasim International Container Terminal (OICT) handed over to the UAE by 2065.
The committee, led by Commerce Minister Syed Naveed Qamar, reviewed the list of entities that could be provided – no final decision was made on Tuesday.
The meeting revealed that the only concrete proposal so far was for the UAE to extend $2 billion in debt maturing in February-March. The loan was already taken by former Prime Minister Imran Khan in 2019, but the country is still unable to repay it.
Currently, Pakistan’s foreign exchange reserves stand at US$4.5 billion, not enough to cost the country another US$2 billion. The International Monetary Fund (IMF) also failed to make any progress during talks held on the sidelines of the Geneva meeting. In April 2022, Prime Minister Sharif visited the UAE to seek additional funding, however, Dubai offered to buy a stake in a listed government entity for $2 billion. Since then, the government has been unable to finalize a model of what entities it could deliver.
At the invitation of UAE President Sheikh Mohamed bin Zayed Al Nahyan, Prime Minister Sharif will visit the UAE on January 12-13, 2023, according to a statement from the Prime Minister’s Office. This will be his third visit to the UAE after taking office.
During the visit, the prime minister’s particular focus will be “advancing economic, trade and investment relations between the two countries and creating more opportunities for the Pakistani workforce in the UAE”, it added.
Pakistan and the UAE have been discussing a proposal to allow the commercialization of PTCL’s property to settle some of the $800 million in outstanding debt – a dispute that could act as a roadblock to further asset sales to Dubai.
Another hurdle in giving Etisalat telecom giant Etisalat an additional 25% stake in PTCL is the withholding of an $800 million dues by Etisalat for the remaining payment for the 26% PTCL stake, according to the sources. Last year, the UAE also tied all future financial packages to asset sales as the country was unable to repay old loans. During a recent meeting with advisers to Prime Minister Ahad Cheema, real estate commercialization was discussed, the source said. However, Pakistani authorities have linked the commercialization license to the payment of outstanding PTCL dues of at least $500 million.
Ahad Cheema could not be reached for comment.
In 2019, Etisalat offered to pay $263.7 million to resolve the dispute. The offer is below the $400 million Etisalat was prepared to offer in 2015. Etisalat valued the non-transferable property at Rs 3,100 crore. Instead of using the prevailing 2019 exchange rate of 140 rupees to the dollar, it converted the amount of 31 billion rupees to $499 million in January 2008 at an exchange rate of 62.75 rupees to the dollar, the source said. “This is not a fair offer,” they added.
Pakistani authorities believe that out of the 33 properties, those located at Jazri Karachi and Lahore Multan Road have a 60/40 split between PTCL and Pakistan Post, which is also acknowledged by PTCL. Also, in Dhana Singh Lahore’s property, 660 kannars, or 92% of the 710 kannars, were mutated.
Etisalat already has Rs 3,000 crore stuck in Technical Service Assistance (TSA), and now it wants $800 million to fix the problem. According to Pakistani authorities, they believe that if Etisalat is allowed to convert the properties for commercial use, it can raise Rs 4,000 crore to pay Pakistan.
At its meeting on Tuesday, the committee reiterated that Pakistan will retain a majority stake in the companies, which at this stage cannot offer a fair price tag due to depressed market prices. At best, Pakistan will provide a list of companies and appoint financial advisers to determine the price based on Dubai’s interest, according to officials. About a dozen semi-government companies are listed on the stock exchange. The big ones include OGDCL, which is 67% owned by the government, Petroleum Pakistan Limited (GOP holds 68%), Sui Nan Natural Gas Co., Ltd. (53%), Pakistan National Petroleum Co., Ltd. (22%), and Sui Bei Natural Gas Pipeline Co., Ltd. 32 % and Mali Petroleum Co., Ltd. Along with some other companies owned by the military including Fauji Fertilizers Ltd, Fauji Cement Ltd etc.
However, PSO, SNGPL and SSGCL cannot be offered to the UAE as the government will lose the management power.
However, with low market prices and plans to offer only a 10% stake, Pakistan may not be able to make enough money to permanently remove the risk of default.
Published in The Express Tribune on January 11day2023.
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