Pakistan’s biggest mobile operator warns license tussle worries investors

Pakistan’s biggest mobile network Jazz, and the country’s second-largest telecoms firm, Telenor, are challenging in court the license renewal process after government’s last-minute price hike for a long-term mobile operating license renewal. (Photo Courtesy: Social Media)
Updated 31 May 2019

Pakistan’s biggest mobile operator warns license tussle worries investors

  • Mobile operators Jazz and Telenor have gone to court challenging the government’s license renewal process
  • A renewal fee has been set at $450 million from an expected $291 million, which mobile operators say is too high

ISLAMABAD: Pakistan’s last-minute price hike for a long-term mobile operating license renewal will worry foreign investors who are seeking stability in their operations, Jazz chief executive Aamir Ibrahim said, amid an ongoing court case about the issue.
Pakistan’s biggest mobile network Jazz, owned by Dutch giant VEON, and the country’s second-largest telecoms firm, Telenor, are challenging in court the license renewal process, which has seen the fee set at $450 million from an expected $291 million.
The battle comes as Pakistan’s government faces heavy pressure to lift tax revenues following a preliminary loan agreement with the International Monetary Fund that will require it to cut billions of dollars from its swollen budget deficit.
Pakistan’s telecoms sector has grown rapidly over the past decade but the market is hyper-competitive and mobile operators fear a tougher period ahead amid a slumping economy and rising inflation that is expected to lead to belt tightening by the country’s 208 million people.
Jazz believes the license increase goes against a previous agreement struck in 2004 and is also frustrated the government had two years to come to a renewal fee decision but raised the price only three weeks before the May 25 deadline.
“Ultimately the investor needs profitability, stability and continuity in a country that’s different from their own,” Ibrahim told Reuters at Jazz’s swish headquarters in the capital Islamabad earlier this week.
“So for a foreign investor having these surprises three weeks prior to the renewal of a license is a big shock.”
The government did not respond to a request for comment. The next court date is set for June 3.
Ibrahim said Jazz, which has 58 million subscribers, and Telenor expected the renewal fee to remain the same as during the auction in 2004, which was won by Warid, a company that was acquired by VEON’s Mobilink and merged to form the Jazz brand.
Another major sticking point for the mobile operators is the decision by Pakistan’s cash-strapped government to set the new fee in US dollars and not in local rupee currency, which has lost about 40 percent against the dollar in the last 18 months.
The 2004 auction for a 15-year license cost $291 million, equivalent to 17 billion rupees at the 2004 exchange rate. But with the rupee plunging to record lows against the dollar, Jazz now faces paying 67 billion rupees for $450 million.
“There is no precedent of the government offering (in dollars) any kind of a concession or a license to a company in Pakistan selling things in Pakistan,” Ibrahim said, pointing out that Jazz charges customers and earns in rupees, not dollars.
“Pricing in dollars is completely unsound.”
Pakistan secured preliminary agreement over a $6 billion IMF bailout program earlier this month that is expected to come with tough conditions requiring it to improve tax receipts to rein-in a ballooning fiscal deficit.
Ibrahim said higher fees will leave Jazz and other operators with less cash to invest in vital digital infrastructure Pakistan will need if it wants to modernize its economy and drive entrepreneurship and growth.
“I understand the government is cash-strapped but what they’re trying to do is milk for short-term gain,” he said. “But that in the process leaves the country behind.”

'No food left in the sea': Pakistani fishermen fearful as Chinese trawlers dock at Karachi port 

Updated 19 October 2020

'No food left in the sea': Pakistani fishermen fearful as Chinese trawlers dock at Karachi port 

  • Fisherfolk forum says government plan to allow Chinese to carry out deep-sea fishing in territorial waters could render millions jobless 
  • Federal government says bottom trawling will not be allowed under new fishing policy

KARACHI: A pressure group that represents Pakistani fishermen has said a government plan to allow Chinese companies to carry out deep-sea fishing in the country’s territorial waters could threaten the survival of at least three million people who depend on the sea for livelihood.
Last month, 12 Chinese deep-sea trawlers docked at the port of Karachi, unleashing fear among local fishermen who say commercial fishing vessels and bottom-trawling would deplete fish stocks in the exclusive federal sea zones off the Sindh and Balochistan provinces. 
Bottom trawling - dragging nets across the sea floor to scoop up fish - stirs up the sediment lying on the seabed, displaces or harms some marine species, causes pollutants to mix into plankton and move into the food chain and creates harmful algae blooms or oxygen-deficient dead zones.
The coastal line of Sindh and Balochistan is 1,050 km long, Mohammad Ali Shah, Chairman Pakistan Fisherfolk Forum, told Arab News last week, saying around three million fishermen relied on the sea to survive. 
A new fishing policy is expected but yet to be revealed by the government, he said. 
“The deep-sea trawler policy has not yet been approved but before that they [China] have brought these trawlers,” Shah said, calling the arrival of the Chinese vessels at Karachi port last month ‘illegal.’ 

In this undated photo, fishing vessels of Fujian Fishery Company move from the Gwadar port towards Karachi, Pakistan (Photo courtesy: Fishermen Cooperatives Society)

In 2018, the government enacted a deep-sea fishing licensing policy that both fishermen's representative bodies and provincial government bodies opposed, calling it a constitutional violation and an encroachment on the livelihoods of fishermen in the coastal provinces.
Fears about foreign fishing companies eating up local communities are not new.
For years, fishermen in the southwestern city of Gwadar in Balochistan province - a flagship of the $60 billion China-Pakistan Economic Corridor - have protested against foreign trawlers. 
Tensions first began to mount when the Fisheries Department disclosed its plan to issue licenses to various foreign fishing vessels to operate in an exclusive economic zone in 2016.
But last week, the federal minister for maritime affairs, Ali Haider Zaidi, told Arab News the country’s new deep-sea fishing policy would not allow Chinese trawlers to engage in unregulated deep-sea fishing. Bottom trawling, he said, would be banned under the new policy.
“Importing boats is not illegal,” he said. “How you use them has to be regulated.”
Pakistan divides its sea into three zones, where zone-3 (from 20 to 200 nautical miles) is controlled by the federal government. Up to 12 nautical miles (zone-1) is the domain of the provinces Sindh and Balochistan and between 12 to 20 nautical miles the sea is declared a buffer zone. 

Fishermen remove fish from a net at the Clifton beach in Pakistan's port city of Karachi on Oct. 6, 2020. (AFP/File)

Local fishermen are not allowed to fish in zone-3 and foreign fishing vessels are not permitted to fish in the other two zones under the existing policy.
The Fishermen's Cooperative Society (FCS), which issued the permit to the Chinese trawlers, said the Chinese fishing vessels would not use the destructive bottom trawling method and instead help ‘upgrade’ Pakistan’s fishing industry and export.
Official figures put the annual value of Pakistan’s fish exports at roughly $450 million.
“Bringing Chinese trawlers for deep sea fishing is in line with the government’s deep-sea fishing policy and aimed at upgrading and modernizing fishing, besides providing job opportunities to local fishermen,” Abdul Berr, Chairman of the Fishermen's Cooperative Society, told Arab News.
“Around 3,500 fishermen will get employment opportunities with the arrival of the world’s latest fishing boats and modern small boats,” Berr said. 
He added: “First, 70 percent of the staff at trawlers and processing facilities will be local. There will be no fishing in provincial territorial waters. The trawlers will bring all their catch to Karachi where it will be processed in factories and then exported.”
Small local fishermen would receive modern fiber boats on ‘easy instalments,’ Berr said, a step towards replacing their obsolete boats.
But Sindh’s minister for livestock and fisheries, Abdul Bari Pitafi, said the mega fishing ships would wipe out sea-life, even if they were only operating in the federal government’s zone-3.
“We will...also oppose its [trawlers’] operations in zone-3 because they will just wipe out sea-life including the fish’s seed,” Pitafi told Arab News.
In 2016, a survey carried out by the Food and Agriculture Organisation revealed that more than 72 percent of the fish stock in Pakistan’s coastal areas had already declined.
“One trawler does a catch that is equal to a catch by 100 of our fishing boats,” Younus Khaskheli, a fisherman, said. “And their fishing net is the most dangerous one, because it hunts thousands of tons of fish.” 
Tens of thousands of fishing boats are registered in Pakistan, he said, with fishermen from Sindh, Balochistan, Punjab, Khyber Pakhtunkhwa and even Bangladesh fishing in these waters.
“Our sea stock will end; the country will lose the income of billions and our fishermen will become jobless,” Khaskheli said. “There won’t be any food left in the sea.”