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G. Rambabu

NEW DELHI, April 14

THE Union Communications Minister, Mr Arun Shourie, is scheduled to meet the Finance Minister, Mr Jaswant Singh, within the next couple of weeks to impress upon him the urgent need to clear a "financial package" for Bharat Sanchar Nigam Ltd (BSNL) totalling over Rs 23,000 crore, that would include the full reimbursement of its licence fees and spectrum charges till 2006-07.

According to official sources, although the Department of Telecommunications (DoT) had given its approval to the financial package and forwarded it to the Finance Ministry close to seven months back, there has been no progress on this front so far.

Unless it is cleared by the Finance Ministry, the matter cannot be taken up before the Union Cabinet, failing which BSNL is likely to slip into the red this fiscal, they added.

Worried at the prospect of the country's premier telecom company dying a slow death, Mr Shourie will be meeting the Finance Minister to explain the need for continuing the Government support to help it stay afloat.

The Finance Ministry has been tightening its purse and has raised objections to any major outgo from the consolidated fund to support the activities of a company that was corporatised close to two-and-a-half years ago, the sources said.

They also said that starting April, BSNL has been forced to stand on its own legs, with the Budgetary support by way of reimbursement of licence fees and spectrum charges having been withdrawn.

At the time of its corporatisation on October 1, 2001 the company had been promised fiscal incentives only till the end of the 2002-03 fiscal.

Faced with falling tariffs and growing competition from the private sector, the company has stated that unless further support is provided by the Government it may be forced to concentrate on the lucrative sectors at the cost of the uneconomic rural sectors.

With close to 97,000 villages yet to be represented on the telecom map, the DoT is keen that BSNL provides them connectivity. But for this, it has to ensure that adequate compensation is provided.

As per the financial package, BSNL is to be fully reimbursed the licence fees and spectrum charges till 2006-07, with the relief provided as an annual grant to be utilised by it exclusively for its rural operations.

It includes waiver of spectrum charges in rural areas and continuation of moratorium on repayment of principal and interest on Government loan.

It further provides that the equity included in the capital structure of BSNL be subjected to a dividend of not more than 10 per cent.

Also, the compensation of Rs 720 crore for investment by BSNL in village public telephones during 2001-02 is to be treated as a loan in perpetuity, and the company is to be exempted from payment of space segment charges to the Department of Space, on the lines of a similar exemption granted to Prasar Bharti.

With regard to the burden of pension of retired DoT employees which currently has been placed only on BSNL, the financial package cleared by the DoT has said that this should henceforth be met out of the dividend payment by MTNL and BSNL deposited in the Consolidated Fund, which would make more resources available to BSNL for investment in the telecom sector.

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