Pakistan’s privatisation minister was on Monday holding last-ditch talks in Dubai to try to salvage the government’s planned $2.6bn sale of Pakistan Telecommunication Company to Emirates Telecommunications (Etisalat).

Abdul Hafeez Shaikh rushed to Dubai late on Sunday after the government began proceedings to cancel the sale, under which Etisalat had agreed to buy a 26 per cent stake in PTCL, Pakistan’s largest telecoms company, in return for management rights.

The cancellation followed Etisalat’s failure on Saturday to meet a second deadline for paying the US$2.34bn still outstanding on the deal.

The PTCL sale, in which Etisalat in July beat rival bidders China Mobile and Singapore Telecom, was celebrated by the Pakistani government as the country’s largest privatisation and a major boost to its economic reform plans.

Mr Shaikh was due to meet senior UAE government and Etisalat officials to discuss a new schedule of payments to revive the deal. But officials at Pakistan’s privatisation ministry warned any new schedule for Etisalat, which missed an earlier deadline in September, could not be extended beyond the end of Pakistan’s financial year next June.

“If Etisalat is looking for financial concessions that could make this deal more attractive, there’s not much they’re going to get,” said one official. A Pakistani government minister said the government formally began proceedings to cancel the deal “after it became clear that Etisalat was looking for too many concessions which were not part of the original agreement”.

These included permission to use a portion or all of the 26 per cent stock as collateral for raising loans from banks and agreement to sell the 26 per cent stock to another buyer in future.

Etisalat also wanted the Pakistani government to list another 15 per cent of the company’s stock on the Dubai Stock exchange, added the minister.

Etisalat has refused to comment. Trading in PTCL shares was suspended on Monday after its share price fell the market’s 5 per cent daily limit to Rps57.20 [US$0.95]. Muhammad Suhail, a director at Karachi’s Jehangir Siddiqui brokerage, said the falls should be limited. “There were reports circulating for many days of a possible breakdown. So this decision is not completely unexpected.”

Sakib Sherani, chief economist for Pakistan at ABN Amro, said any cancellation “would have repercussions for the government’s fiscal position” at a time when it was grappling with the cost of the October 8 earthquake.

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