Pakistan is considering international arbitration against UAE-based telecommunications group Etisalat, now known as e&, to recover approximately $800 million in outstanding payments from the 2005 privatisation of Pakistan Telecommunication Company Limited (PTCL). The government is also seeking to recover the opportunity cost of the unpaid amount since 2008, along with applicable damages, as the dispute over the transaction remains unresolved after nearly two decades. The matter was discussed during a joint meeting of the Senate standing committees on information technology and privatisation on Tuesday, where officials informed lawmakers that the Office of the Attorney General for Pakistan (OAGP) had been directed to implement the federal cabinet’s decision under Rule 24 of the Rules of Business, 1973. The government is now examining the legal route available under the original sale and purchase agreement, which provides for international arbitration. However, Pakistan has not yet initiated arbitration proceedings. The Attorney General has been asked to assess the strength of the government’s case, its prospects of success and the legal implications before any formal notice is issued to Etisalat. The potential move follows years of negotiations and administrative efforts to resolve the outstanding payment, which has remained a major unresolved issue from the sale of the state-owned telecommunications operator.
The dispute dates back to 2005, when Pakistan sold a 26 per cent stake in PTCL, along with management control, to Etisalat International Pakistan for $2.59 billion. The government received approximately $1.76 billion from the transaction, while around $800 million remained unpaid. According to a briefing submitted by the Privatisation Division, the outstanding amount is linked to the transfer of PTCL properties to the new management. Of the company’s 3,246 properties, approximately 99 per cent have been transferred, while 32 remain unresolved. Etisalat has continued to withhold the remaining payment because these properties have not been transferred as required under the transaction arrangements. The property issue has therefore remained central to the disagreement between the Pakistani government and the company. The Privatisation Division said successive governments had made efforts since 2015 to resolve post-privatisation matters, including the formation of committees and negotiations with Etisalat for an amicable settlement. Despite those efforts, the parties have not reached a resolution on the outstanding amount. The latest government assessment has consequently revived the option of using the dispute-resolution mechanism provided in the original agreement. The proposed claim would cover not only the unpaid $800 million but also the financial cost of being deprived of the funds since 2008 and any damages that may be legally established.
In July 2026, the government constituted another committee headed by the adviser to the prime minister on privatisation, with representation from the ministries of information technology and law, as well as the Office of the Attorney General. After reviewing the long-running disagreement, the committee recommended that Pakistan consider international arbitration under the sale and purchase agreement. It also proposed seeking the outstanding payment, opportunity cost dating back to 2008 and applicable damages. The recommendation was subsequently placed before the federal cabinet, which directed the Attorney General’s office to proceed with the matter. The legal assessment is expected to determine whether the government has sufficient grounds to pursue arbitration and what risks could arise from initiating formal proceedings. According to the Privatisation Division’s briefing, if the Attorney General considers the case suitable for arbitration, approval from the prime minister or the federal government would be required before a Notice of Intent is issued to Etisalat. This means that the current development represents a move towards evaluating formal legal action rather than confirmation that proceedings have already begun. The outcome of the legal review will be important in determining whether Pakistan proceeds with arbitration or continues to explore other options for resolving the payment dispute.
The issue also prompted questions from lawmakers about transparency surrounding the original privatisation agreement. During the joint Senate committee meeting, Information Technology Secretary Zarrar Hasham Khan described the agenda concerning Etisalat’s outstanding payment as sensitive and requested that unauthorised persons, including media representatives, leave the session. The proceedings were subsequently held in camera. However, some senators later expressed concern that parliamentarians themselves had not been given access to the sale and purchase agreement covering the transfer of PTCL shares and management control. Members questioned why elected representatives could not review details of a transaction involving a major national asset, particularly when the government was considering a potentially costly international legal dispute. The disagreement over access to the agreement has added a parliamentary oversight dimension to the matter, alongside the financial and legal questions surrounding the unpaid amount. For Pakistan, the potential recovery of $800 million, together with any additional compensation established through the legal process, would represent a significant financial claim. However, the eventual outcome will depend on the terms of the original agreement, the unresolved property transfers and the legal assessment of the government’s position. Etisalat has withheld the payment over the outstanding properties, while Pakistan is examining whether arbitration can provide a route to settle the dispute and recover the remaining proceeds from the 2005 transaction.
Follow the SPIN IDG WhatsApp Channel for updates across the Smart Pakistan Insights Network covering all of Pakistan’s technology ecosystem.
