The Finance Ministry has rejected the Department of Telecom's proposal to appoint Bharat Sanchar Nigam Ltd as the agency for executing the national optical fibre broadband project.

The Finance Ministry has said a Special Purpose Vehicle comprising both private and state-owned operators should be entrusted with the responsibility of executing the Rs 20,000-crore project.

“BSNL should not be selected on nomination basis. An SPV incorporated under the Indian Companies Act may be entrusted with the responsibility of execution of the programme. The SPV will select implementing agency through competitive bidding from amongst eligible operators,” the Department of Economic Affairs said in response to a draft note circulated by the DoT for the consideration of the Cabinet Committee on Infrastructure.

Majority share

While the DoT had suggested creating an SPV for the purpose of managing the fibre network after the roll-out is completed, the Finance Ministry has said that the entity should be created at the first stage itself.

However, the majority share in the SPV should be that of the Government, it added.

The Ministry's view is in line with the recommendations of the Telecom Regulatory Authority of India. The telecom regulator had expressed concern over giving the mandate to BSNL in a competitive market. “BSNL is currently one of the service providers. If it is the executing agency, including the maintenance of the network, there is a serious problem of the lack of level playing field vis-a-vis other service providers. This would be critical since the optical fibre network is envisaged as providing non-discriminatory access. There is a serious risk of anti-competitive behaviour setting into the network management,” the TRAI had said in a letter to the DoT in May.

A committee headed by Mr Sam Pitroda, Advisor to the Prime Minister, had also suggested setting up an SPV comprising Central public sector undertakings, which already own optical fibre cable. The proposal included BSNL, RailTel and Power Grid Corporation as part of the SPV.

However, the DoT had taken the view that BSNL was best positioned to execute the project as it already owns 6.25 lakh route km of optical fibre cable out of total 11 lakh route km OFC laid in the country by all operators. The Finance Ministry has suggested that assistance of BSNL may be taken for carrying out a detailed project report before rolling out the network aimed at connecting 2.5 lakh village panchayats.

Project cost

The Ministry has also cautioned the DoT against seeking any monetary assistance for the project from the exchequer.

“The cost of the project is estimated at Rs 20,100 crore. It has also been indicated that the cumulative accrual of funds in the USO fund in next three years is Rs 36,000 crore. Thus, the project is supported on the express understanding that there will be no liability on the state exchequer,” the note added.

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