Ministries allow BSNL use of USOF to set up, manage mobile towers in Naxal areas

The govt has proposed to provide money to BSNL from Universal Service Obligation Fund built with share of private telcos' revenues

The government has received approval from all the concerned ministries for reimbursing capex and opex of estimated Rs 3,046.12 crore to state-owned Bharat Sanchar Nigam Ltd (BSNL) for setting up and managing mobile towers in the areas affected by Left-wing extremism (LWE) for the first five years.

The government has proposed to provide the money to BSNL from the Universal Service Obligation Fund (USOF) that was built with a share of private telcos’ revenues, to subsidise telecom infrastructure in rural India and also supports development of new products and services to improve broadband connectivity.

The Ministry of Home Affairs, Planning Commission, Ministry of Rural Development, Ministry of Tribal Affairs, Department of Legal Affairs and the Ministry of Finance (Department of Expenditure) have already given approval to the draft Cabinet Note on the matter.

The ministries have also approved the proposal for using the USOF in award of the work to BSNL on a nomination basis, waiving the requirement for the open bidding process.

However, the finance ministry has communicated that the DoT should provide more details justifying the reason for taking the nomination route and not the open bidding route, although communication infrastructure in the LWE affected areas is a priority.

The Department of Legal Affairs, however, noted that amendments are required in the Indian Telegraph Act to follow the nomination route to fund the project from USOF.

Private operators have reportedly admitted that they would not be willing to take the risk of working in the LWE affected areas.

All the concerned ministries have stated that the actual cost of the project should not exceed the estimated financial implication of Rs 3046.12 crore.

Meanwhile, the government has earlier proposed that the USOF should be used in extending support for the operating expenses to BSNL for managing the mobile towers in the areas affected by Left-wing extremism (LWE), even after the first five years.

According to a recent communication by the Ministry of Home Affairs, as most of the towers will be installed in the rural, hilly and forest areas, these may not be commercially viable even after five years. The ministry has suggested that USOF support for operating expenses may be extended after reviewing commercial viability of these mobile towers after every five years.

It is estimated that BSNL would require Rs 1,469 crore as capital expenditure to set up 1,836 towers and Rs 1,577crore as operating expenses to manage the sites for five years.
The government has already decided that BSNL will be subsidised the entire amount through the Universal Service Obligation Fund (USFO).

USOF, which is used to subsidise telecom infrastructure in rural India and also supports development of new products and services to improve broadband connectivity, is built with a share of private telcos’ revenues.

However, the Planning Commission has earlier communicated to the Department of Telecommunications (DoT) that the ministry should restrict the USOF support to the state-run telco to a maximum of Rs 3,046.12 crore, which was the revised estimate for reimbursing capex and opex to BSNL for installing and managing the mobile towers in the LWE affected areas.

According to home ministry estimates, about 56,000 inhabited villages are not covered by any telecom service provider. Of these, 2,199 fall in nine states — Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Maharashtra, Madhya Pradesh, Odisha, Uttar Pradesh and West Bengal — affected by LWE.