ISLAMABAD: Pakistan has decided to pursue international arbitration against UAE-based telecommunications company Etisalat to recover around $800 million in outstanding proceeds from the privatization of Pakistan Telecommunication Company Limited (PTCL), with preparations for legal proceedings completed, a member of parliament told Arab News on Thursday.

The move marks a major escalation in a two-decade dispute over the transfer of properties included in the 2005 privatization agreement. Pakistan says it has transferred 3,214 of the 3,246 properties covered by the deal, but Etisalat has withheld the outstanding payment because ownership of the remaining 32 could not be transferred.

“The government has now decided to pursue arbitration through the International Court. All preparations have been made,” the committee member told Arab News, speaking on condition of anonymity because the parliamentary briefing on the matter was held in camera.

The disclosure was made during a joint session of the Senate committees on privatization and information technology and telecommunications, which met on Tuesday to discuss the outstanding $800 million payment.

The member said officials indicated that the matter was heading toward legal proceedings imminently, adding that the outstanding funds were unlikely to be recovered soon without progress through arbitration.

The dispute centers on properties Pakistan was required to transfer under the terms of its 2005 privatization agreement with Etisalat. The company withheld the remaining payment, citing the government’s failure to transfer all the properties covered by the deal.

The committee member said the outstanding properties involved assets that could not legally be transferred, while differences over exchange rates and property valuations had further complicated efforts to reach a settlement.

The government had also failed to provide the parliamentary committee with a copy of the original sale agreement, the member said. Officials had told the committee that the arrangement involved a sovereign guarantee from Pakistan but did not provide the document despite a request.

“Given this arrangement, I don’t think the funds will materialize anytime soon unless there is a development through the International Court,” the member added.

TWO DECADES OF DISPUTE

Pakistan sold a 26 percent stake in PTCL, along with management control, to Etisalat International Pakistan in 2005 for $2.59 billion.

The government has received approximately $1.76 billion, leaving around $800 million unpaid. The payment was linked to the transfer of PTCL properties to the new management.

The dispute has persisted despite repeated negotiations and the formation of several government committees since 2015.

In 2019, the government explored deducting around $60 million from the outstanding payment to account for properties whose ownership titles could not be transferred.

Some properties were partially owned, rented, occupied by government departments despite belonging to provincial authorities, or were not owned by PTCL in the first place.

In January 2020, Etisalat reportedly offered around $275 million to settle the dispute, substantially below the outstanding $800 million. The proposal did not lead to a settlement.

Two years later, in February 2022, Pakistan again sought an early settlement during a meeting between former finance minister Shaukat Tarin and Etisalat International Group chief executive Hatem Dowidar.

In July 2026, Prime Minister Shehbaz Sharif constituted another committee to examine the outstanding payment and recommend a way forward. The committee recommended pursuing international arbitration, including a claim for the financial returns Pakistan could have earned on the withheld amount since 2008, as well as applicable damages, according to Dawn, a leading English-language newspaper in Pakistan.

The committee member said the original failure was the government’s decision to include properties in the privatization agreement without adequately establishing whether their ownership could legally be transferred.

The move toward arbitration could mark a significant shift in Pakistan’s approach to recovering the outstanding proceeds after successive governments failed to resolve the matter through negotiations.