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This is an archive article published on April 25, 2022
BharatNet PPP: As incentive, DoT to assume revenue risk
Officials said that the companies bidding for the second round will only have to bring in the capital expenditure and operational expenses for the project without worrying about the fluctuations associated with the revenue.
As a part of the revised plan, the government is likely to either provide a minimum revenue
per month per state
to the bidders who successfully complete
their project or subsidise some of their operational expenditure
Having failed to get any bids in the first round of request for proposal (RFP) for the implementation of BharatNet in public-private-partnership (PPP) mode, the Department of Telecommunications (DoT) has now decided to assume the revenue risk for the second round of bidding, sources in know of the development said.
“Most of the companies had expressed apprehension that the newer connections may not fetch as much revenue in semi-urban and rural areas since there is ample proliferation of mobile internet. We have assured them that they do not need to worry about the revenue and expect good bids in this round,” a senior DoT official said.
Officials said that the companies bidding for the second round will only have to bring in the capital expenditure and operational expenses for the project without worrying about the fluctuations associated with the revenue.
As part of the revised plan, the government is likely to either provide a minimum revenue per month per state to the bidders who successfully complete their project or subsidise some of their operational expenditure.
“We hope to complete the bidding process soon. Depending on the inputs from the bidders, the details of how revenue will be given will be finalised,” another official said.
As of February 2022, only about 1.72 lakh of the initially targeted 2.5 lakh gram panchayats had been connected to the central grid under BharatNet. Official sorces also said on average, only about 20,000 gram panchayats are being connected to the BharatNet grid every year.
The government’s flagship rural internet connectivity project BharatNet, which has been delayed by over 10 years now, aims to connect all six lakh villages in the country with high speed broadband internet. The scope of the project was to initially connect only the 2.5 lakh gram panchayats.
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On August 15, 2020, Prime Minister Narendra Modi announced that the scope of the project has now been expanded to connect all the villages, in addition to the gram panchayats and the blocks within the next 1,000 days. Later in June 2021, the Union Cabinet approved a plan to rope in private players as well for the implementation of the internet connectivity scheme in the PPP mode.
Under the PPP mode implementation of BharatNet approved by the Union Cabinet in June last year, a concessionaire selected through a competitive international bidding process will be responsible for creation, upgradation, operation, maintenance and utilisation of BharatNet.
As per the proposal approved then, the total cost of the project was estimated at Rs Rs 29,432 crore, of which the government had to spend Rs 19,041 crore as viability gap funding. A RFP was floated in July 2021 but it failed to get any response from any company as most bidders cited the high cost of the project and the uncertainty of revenues.
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