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Tuesday, 05 May 2015 00:00
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Private sector chairman won't help NOFN take off

Given the manner in which most PSUs, particularly in the telecom sector, have fared in terms of achieving targets, it is hardly surprising that the government’s ambitious plan to connect 2.5 lakh gram panchayats through a national optic fibre network (NOFN) is going nowhere. The Rs 21,000 crore project, being implemented by Bharat Broadband Networks Limited (BBNL) was supposed to be completed by September 2015. While the date has been shifted to December 2016, this is the least of the problems. Of the revised first phase target of laying 1.2 lakh km of fibre, only 13,000 km of pipe and 7,400 km of cable was laid as of the end of December 2014—work has started in just 455 of the 6,533 blocks targeted in the first phase; in other words, another big delay is almost certain since a total of 7 lakh km of fibre has to be laid across the country.

Given the vastly superior project execution capabilities of the private sector, it was never clear why a public sector process was chosen, but that is why, according to The Economic Times, an expert panel on BBNL’s NOFN has recommended the post of chairman and managing director be split and sweeping changes be brought about in the autonomy and flexibility given to BBNL. So, the chairman is to be ‘a globally renowned and eminent Indian with proven expertise in project management, preferably from industry’ while the managing director and CEO should be ‘an experienced executive from (the) government (system with a) credible track-record of managing and delivering projects’. In addition, the committee has asked for ‘de-layering’ of the decision-making process, to have an empowered group headed by the telecom minister which can take quick decisions while cutting out the bureaucracy. All of this is a good idea, but when is the last time this happened in a PSU set up? There have, of course, been honourable exceptions, and the Delhi Metro comes to mind immediately but, by and large, the PSU process tends to be a lot more sluggish than the private sector process. Which is why, even at this stage, it would be a good idea to see how this can be farmed out to the private sector which allowed, NHAI for instance, to deliver top quality results under the Vajpayee government.

Another decision that needs to be taken, sooner rather than later, is whether to continue at all with the Universal Service Obligation (USO) Fund—5% of all adjusted gross revenues of telcos are paid to this fund compulsorily each year, and it is this money that is being used to fund the NOFN. Indeed, while the USO Fund was initially set up to help fund rural telecom, the USO procedures were so difficult to comply with, few used the money—as compared to R62,300 crore collected since it was set up, just R20,000 crore have been disbursed for projects so far. If the fund is scrapped, given the way data demand is rising, the funds saved by telcos will, in any case, be used to build up India’s internet backbone.


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