Twenty years is long enough to wait for $800m

Pakistan sold PTCL in 2005 and is still owed about $800 million for it. The cabinet has now asked the attorney general to prepare for arbitration against Etisalat. That is the right step, provided the state uses it to end the dispute and first puts its own side of the file in order.

The story was back in Parliament on Tuesday, when a joint meeting of the Senate committees on privatisation and information technology heard where things stand. The figures have barely moved in years. Pakistan sold 26 per cent of Pakistan Telecommunication Company Limited, along with management control, for $2.59 billion. It has received $1.76 billion. About $800 million remains unpaid, and Etisalat, now known as e&, says that is because the state has not transferred all the properties it promised.

According to the Privatisation Ministry’s briefing, 99 per cent of those properties have now been transferred. Thirty-two of 3,246 have not. A committee formed in July under the prime minister’s privatisation adviser has concluded that, after two decades, Pakistan should consider arbitration as the sale agreement allows, to recover the balance, the cost of waiting for it since 2008, and damages. Etisalat had not commented when the news broke.

Look at the last two of those numbers side by side. The money withheld is roughly nine times what Pakistan’s own valuers have said the missing properties are worth. Whatever the fine print says about the order in which things had to happen, that gap is the heart of the matter, and the strongest argument Pakistan has.

How 32 properties held up $800 million

The history explains how a small problem grew so large. Under the revised agreement signed in 2006, Etisalat paid $1.4 billion up front, with the remaining $1.2 billion due in nine half-yearly instalments. Those instalments depended on clean titles for 98 per cent of the properties by January 2007 and all of them by January 2008. Pakistan missed both dates. Etisalat paid three instalments, worth about $400 million, and has paid none since.

That is where this newspaper must be plain. The first failure was ours. The state signed an agreement promising to clear titles to thousands of buildings, exchanges and plots scattered across the country, many of them tied up with provincial departments or in court, on a timetable it could not meet. A secretary of the Privatisation Commission told senators in 2019 that the problem had grown from a lack of proper homework in identifying the properties. That was an honest admission, and a tribunal would hear about it.

But the agreement also anticipated this exact failure. Officials have told Parliament that if a property could not be transferred, each side would value it, and the higher figure would be deducted from what was owed. The remedy for a missing building was a deduction for that building. It was not a licence to hold on to the rest of the money for 18 years. Pakistan’s valuers put the outstanding properties at about $88 million, and said in 2019 that Etisalat had given its own findings to the escrow agentA neutral third party that holds money or documents until the terms of a deal have been met. but not to the government. Etisalat, for its part, reopened the list that year, arguing that the shortfall also included another 363 properties.

Why this should not wait any longer

The money matters. At today’s exchange rate, $800 million is well over Rs200 billion, which is roughly eight times the Rs28 billion paid out so far under the prime minister’s fuel relief package. It would have been worth far more in the years it could have been used. Even at a modest 5 per cent a year, simple interest over the 18 years since 2008 would add about $720 million, on this newspaper’s own rough arithmetic. That is why the committee is right to ask for the cost of waiting as well as the principal, though no one should assume a tribunal would grant it in full.

The principle matters as much. Pakistan is in the middle of an ambitious privatisation programme. PIA has passed to new owners. The Islamabad, Faisalabad and Gujranwala power distributors are due to be sold in the first quarter of 2027, with others to follow. Each buyer will read the PTCL file closely. A state that lets its largest sale sit half-settled for two decades tells the market two unwelcome things: that its titles cannot be relied on, and that it can be outwaited.

And there is the matter of who gets to know. Senators on Tuesday were surprised to find that they had not been given the sale agreement. The session went behind closed doors, and one senator complained afterwards that parliamentarians were apparently not to be trusted with what officials could safely read. There may be genuine commercial reasons for confidentiality. They cannot extend to the elected committees that oversee the sale of a national asset, which can read such a document in private. The people’s representatives should not have to ask how the people’s company was sold.

Arbitration, with eyes open

None of this makes international arbitrationA private legal process in which an independent tribunal, not a national court, decides a dispute between the parties to a contract. a simple remedy. Pakistan’s experience of such tribunals has been sobering. The Reko Diq case produced an award of nearly $6 billion against the country in 2019 before it was resolved by settlement, and it taught an expensive lesson about going into these rooms underprepared.

So the ministry’s briefing is right on the sequence. The attorney general must first assess the strength of the case, its prospects and its legal implications, and only then seek approval from the prime minister or the federal government before any notice of intent goes to Etisalat. The hard questions should be asked now, in private, by Pakistan’s own lawyers, rather than for the first time before a tribunal by the other side’s. What exactly does the 2006 agreement make conditional on what? What happens to a claim that has waited so long? Which of the many versions of the property list binds both parties? Who in the state has the original documents, and can they be found?

That assessment should have a deadline. This file has seen committee after committee since 2015. Officials spoke of arbitration in 2018 and again in 2019. A new caretaker minister spoke hopefully in 2023 of a telecom tribunal. A minister of state later told a National Assembly committee that the government was looking for a middle ground and might not recover the full amount. In January, Mr Dar and Etisalat’s chairman discussed the company’s pending issues in Dubai. The government should give the attorney general 60 days and then make a decision in public. A threat repeated for eight years persuades no one.

Friends keep clear accounts

Officials have long been wary of what a legal battle might do to one of Pakistan’s most valuable relationships. In 2019 the Privatisation Commission said it wanted an amicable solution in order to avoid bitterness in bilateral ties. That caution is understandable. The United Arab Emirates has stood by Pakistan with deposits, loans and investment commitments during difficult years. Many Pakistani families depend on work in the Emirates. And e& remains an investor in the country, with PTCL recently acquiring Telenor Pakistan and Orion Towers and pressing ahead with fibre and 5G. In April, PTCL rejected reports that its shareholders were having second thoughts as baseless.

All of that is a reason to handle this carefully. It is no reason to leave it unsettled. Arbitration clauses exist so that a commercial disagreement can be decided on its merits without becoming a diplomatic one. Etisalat is a company, its dispute with Pakistan is about a contract, and both governments have an interest in removing an old irritant from a relationship that has larger business to do. A fair settlement, reached at the table with a credible alternative behind it, would serve both countries better than another decade of polite meetings. Abu Dhabi is more likely to respect a partner that knows its own case than one that keeps raising the subject and dropping it.

The best outcome remains a negotiated one. Let both sides put their valuations of the 32 properties on the table, as the agreement envisaged. Let the higher figure be deducted. Let the parties then bargain honestly over the remainder and the cost of the delay. If Etisalat’s valuation is close to Pakistan’s, the gap is small enough to close in a season. If it is not, or if it will not be shared, a tribunal can decide.

What the next buyer should see

Whatever happens to this $800 million, the state should make sure it never has another dispute like it. Before any distribution company goes to bidders, every plot and grid station it claims should be surveyed, its title checked and its problems listed. Anything that cannot be transferred cleanly should come out of the sale at the start, at a stated value. Balances should be secured by something stronger than goodwill. Payment terms should not hang on promises the state cannot keep on its own, particularly where provinces hold the land records.

There is also a modest reform that would cost nothing. When a national asset is sold, the agreement should go to the relevant parliamentary committees as a matter of course, and a report on what has been paid, what is owed and what remains undone should be laid before Parliament every year until the deal is closed. Had that been the rule in 2008, this dispute would have been harder to forget.

Pakistan made mistakes in this sale, and it should say so before a tribunal says it first. But it delivered 99 per cent of what it promised and has been waiting since before most of today’s telecom users had a smartphone. Twenty years of committees are enough. Either the money comes, less a fair deduction, or the case goes where the contract says it can.