By Kuhu Singh Abbhi
After much deliberation, the government has finally approved the public-private partnership (PPP) model of implementation for the BharatNet project. The move is expected to provide a shot in the arm for the government’s ambitious project, which aims to bring broadband connectivity to the 250,000 gram panchayats in the country.
Policymaking bodies such as NITI Aayog and the regulator, Telecom Regulatory Authority of India (TRAI), have been pushing for increased private sector engagement in the project since 2016. With the PPP mode finally in place, industry stakeholders are optimistic about the progress of the project, which will help bridge India’s digital divide.
The BharatNet project, which began as the National Optical Fibre Network in October 2011, has faced multiple problems so far. The project has missed several deadlines in the past and progress has been slow due to the failure of the implementation agencies to complete work on time. As of September 2020, work on BharatNet had either completely stopped or was experiencing delays in as many as eight states, including Andhra Pradesh, Gujarat, Telangana, Odisha and Tamil Nadu. Most of these states had even written to the Department of Telecommunications (DoT), highlighting the shortage of workers to dig trenches and lay down optical fibre due to the Covid-induced lockdown. To address these issues, the government started considering private sector participation.
Switching to the PPP mode
The idea of moving to the PPP model for the BharatNet project was first proposed by TRAI in 2016. TRAI had argued that such a model would ensure maintenance, usage and marketing of the mega infrastructure. However, DoT did not actively accept these recommendations. Later, in 2019, the NITI Aayog too recommended that the PPP model be adopted for project implementation. Since the project had faced numerous delays in implementation along with several cost escalations till that time, the government unanimously agreed to devise a revised implementation strategy with a much larger role for the private sector. The strategy was formulated through a collaborative effort between DoT and NITI Aayog.
NITI Aayog, along with DoT, undertook a detailed analysis of various aspects of the project to arrive at an optimal and commercially viable PPP structure. The structure was then deliberated upon and finalised based on the inputs of various committees, investor interactions and stakeholder consultations. The PPP model, under which concessionaires are proposed to be awarded through a single-stage competitive bidding process, was approved by the union cabinet on June 30, 2021 as part of its revised implementation strategy.
The revised strategy
As per the revised strategy, the PPP mode of implementation has been allowed in 16 states – Kerala, Karnataka, Rajasthan, Himachal Pradesh, Punjab, Haryana, Uttar Pradesh, Madhya Pradesh, West Bengal, Assam, Meghalaya, Manipur, Mizoram, Tripura, Nagaland and Arunachal Pradesh. All the inhabited villages in these states, including gram panchayats, will be provided optical fibre connectivity. As per government estimates, around 361,000 villages will be covered under the revised plan.
A sum of up to Rs 190.41 billion has been approved by the government as viability gap funding (VGF) for the implementation of BharatNet in PPP mode in these states. The total expenditure to cover 361,000 villages in 16 states will be Rs 294.3 billion, including the VGF by the government. The remaining amount is expected to be infused by private sector players.
The revised strategy includes the creation, upgradation, operations, maintenance and utilisation of BharatNet by the concessionaire (private sector partner), which will be selected through a competitive international bidding process. The programme has been divided into nine packages, covering various aspects of the project and no one company will be allowed to have more than four packages. According to the government, this move has been undertaken to eliminate the risk of monopoly.
Earlier, DoT had prepared a draft request for proposal (RfP) for the PPP model and sent it to NITI Aayog for vetting. On July 6, 2021, the Digital Communications Commission approved the RfP for PPP implementation, and the tenders for selecting the concessionaire are expected to be floated soon.
Further, the cabinet has given in-principle approval for extending BharatNet to cover all inhabited villages in the remaining states and union territories (UTs). DoT will separately work out the modalities for these remaining states/UTs.
With the revised strategy for BharatNet implementation in place, the private sector will have a much larger role in BharatNet’s implementation. Further, the move towards PPP is expected to augment the overall progress of the project. For one, the PPP model will leverage private sector efficiency for operations, maintenance, utilisation and revenue generation, which is expected to result in faster project roll-out. Moreover, the selected private sector partner is expected to provide reliable, high-speed broadband services as per a pre-defined service level agreement. The states where the PPP model is envisaged will facilitate free right of way (RoW), thereby reducing approval-related issues. The private player will be able to use innovative technologies to provide better services to customers. The private sector partner is also expected to bring an equity investment and raise resources towards capital expenditure and operations and maintenance of the network.
Revenue from the BharatNet infrastructure will be generated from different sources including broadband connections to individuals and institutions, sale of dark fibre, fiberisation of mobile towers and e-commerce. The biggest advantage of private participation will be the enhanced proliferation of broadband to the deepest rural pockets that will help bridge the rural-urban divide in terms of accessibility of digital services and accelerate the move towards Digital India. The extension of BharatNet’s reach to all inhabited villages, and provision of reliable, quality, high speed broadband will improve access to e-services offered by various central and state government agencies. It will also enable access to various broadband-based applications like online education, telemedicine, skill development and e-commerce.
For consumers, the PPP mode will offer advantages such as high service quality, faster network deployment, quick connectivity, competitive tariffs for services, and access to a variety of online services on high-speed broadband including OTT and multimedia services.
What lies ahead?
Net, net, the announcement of allowing PPPs under BharatNet can prove to be a game changer for the project. The private sector’s higher level of efficiency, greater technological know-how and access to funds can help compliment the public sector agencies’ lack of funds and project execution abilities. However, some industry experts opine that private players may not find the existing BharatNet architecture and assets lucrative enough. The true picture will emerge only when RfP for the PPP mode is floated and the bidding process begins.
Recent Update: Bharat Broadband Network Limited (BBNL) has recently invited global tenders for implementation of BharatNet project through the PPP mode in nine separate packages across 16 states for a concession period of 30 years.
For more information refer: https://tele.net.in/bbnl-floats-tender-for-implementation-of-bharatnet-project-through-ppp-mode/?utm_medium=email&utm_source=Today%27s%20News:%20B&utm_campaign=tele.net.in-newsletter%2021July%202021