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The Comptroller and Auditor General (CAG) has released a report highlighting significant financial irregularities within Bharat Sanchar Nigam Ltd (BSNL), specifically pointing to a loss of Rs1,757.76 crore due to the failure to bill Reliance Jio Infocomm Ltd (RJIL) for shared infrastructure usage over a decade. This revelation underscores critical shortcomings in BSNL's management and its ability to enforce contractual agreements, ultimately impacting the state-run telco's financial health. The CAG report, tabled in Parliament, not only addresses the BSNL-Reliance Jio issue but also raises concerns about broader lapses within the Ministry of Communications and the Ministry of Electronics and Information Technology (Meity), including delays in revenue assessments leading to further financial losses. The core of the BSNL-Reliance Jio dispute revolves around the interpretation and enforcement of a Master Service Agreement (MSA) signed in May 2014, allowing Reliance Jio to utilize BSNL's passive infrastructure. The agreement outlined specific conditions regarding the mounting of antennae and remote radio heads (RRH) on BSNL's towers. However, a crucial point of contention arose concerning the implementation of different technologies, specifically Frequency Division Duplexing (FDD) and Time Division Duplexing (TDD). BSNL's corporate office clarified in January 2019 that these were distinct technologies, and any additional implementation would incur a 70% additional charge, as per the MSA. While some BSNL circles initially raised invoices reflecting these additional charges, the billing abruptly ceased after August 2019, allegedly under instructions from BSNL's corporate office. Reliance Jio, on the other hand, contested the additional charges, arguing that FDD and TDD were simply alternative transmission modes within the same Long-Term Evolution (LTE) or 4G technology. This disagreement over technical interpretation and the subsequent failure to enforce the tariff clause in the MSA resulted in significant revenue loss for BSNL. The CAG report further criticizes BSNL's inaction in pursuing available arbitration options to recover its legitimate dues. A committee formed in August 2020 to address the issue took over three years to finalize its recommendations, which were ultimately rejected by Reliance Jio. This prolonged delay and the inability to reach a mutually acceptable resolution highlight a lack of effective negotiation and dispute resolution mechanisms within BSNL. Beyond the Reliance Jio issue, the CAG report also points to other instances of financial mismanagement within BSNL. These include the failure to apply annual escalation charges to infrastructure sharing billing from 2015-16 to 2023-24 and the injudicious procurement of polyethylene insulated jelly filled (PIJF) underground cables, resulting in significant wastage. Furthermore, the report highlights the failure to deduct the share of license fees from revenue share paid to telecom infrastructure providers (TIPs), leading to additional losses. These various instances of financial mismanagement paint a concerning picture of BSNL's operational efficiency and financial oversight.
The financial health of BSNL has been a subject of concern for several years. As of March 2023, the Union government's investment in BSNL stood at Rs38,886.44 crore. While BSNL's total revenues and losses during FY22-23 were Rs20,698.90 crore and Rs6,662.20 crore, respectively, the CAG notes that the decrease in losses was primarily due to reduced employee benefit expenses and increased cellular income. Despite a revival package of Rs3.2 lakh crore implemented by the government, BSNL's financial performance remains a challenge. The inability to effectively manage contracts, enforce billing practices, and control procurement costs significantly hinders the telco's ability to achieve sustainable profitability. The CAG report serves as a critical assessment of BSNL's operational and financial performance, highlighting the need for significant improvements in its management practices. The failure to bill Reliance Jio for shared infrastructure usage is a stark reminder of the importance of enforcing contractual agreements and resolving disputes effectively. The injudicious procurement of underground cables and the failure to deduct license fees further underscore the need for improved financial oversight and planning. To address these issues, BSNL must prioritize strengthening its contract management processes, implementing robust billing systems, and improving its financial planning and procurement practices. This includes establishing clear guidelines for interpreting and enforcing contractual agreements, developing effective dispute resolution mechanisms, and ensuring that procurement decisions are based on thorough needs assessments and cost-benefit analyses. Furthermore, BSNL needs to invest in training and development programs to enhance the skills and knowledge of its employees in areas such as contract management, financial planning, and procurement. This will help to ensure that BSNL has the necessary expertise to effectively manage its operations and finances. The government also has a crucial role to play in supporting BSNL's turnaround efforts. This includes providing adequate funding for infrastructure upgrades, supporting the development of new services, and creating a level playing field for BSNL in the highly competitive telecom market. By working together, BSNL and the government can address the challenges facing the telco and ensure its long-term sustainability. The issues raised in the CAG report are not unique to BSNL. Many state-owned enterprises face similar challenges in terms of operational efficiency, financial management, and contract enforcement. Addressing these challenges requires a comprehensive approach that includes strengthening governance structures, improving transparency and accountability, and fostering a culture of performance and innovation.
The long-term implications of BSNL's financial struggles extend beyond the company itself. As a state-owned telco, BSNL plays a critical role in providing affordable and accessible telecommunications services to rural and underserved areas. Its financial viability is therefore essential for ensuring that these communities have access to the same opportunities as those in urban areas. The failure to effectively manage its operations and finances not only undermines BSNL's ability to provide these services but also places a burden on the government, which is ultimately responsible for bailing out the company. Moreover, the issues highlighted in the CAG report raise concerns about the broader governance and oversight of state-owned enterprises. The lack of effective contract management, the delays in resolving disputes, and the injudicious procurement practices all point to systemic weaknesses in the way these enterprises are managed. Addressing these weaknesses requires a fundamental shift in the culture and mindset of state-owned enterprises. This includes fostering a culture of accountability, transparency, and performance, as well as promoting innovation and entrepreneurship. The government also needs to strengthen its oversight mechanisms and ensure that state-owned enterprises are held accountable for their performance. In conclusion, the CAG report on BSNL's financial irregularities is a wake-up call for the government and the company itself. The issues highlighted in the report are not merely isolated incidents but rather symptoms of deeper systemic problems. Addressing these problems requires a comprehensive and sustained effort that includes strengthening governance structures, improving operational efficiency, and fostering a culture of accountability and performance. Only then can BSNL hope to achieve sustainable profitability and fulfill its critical role in providing affordable and accessible telecommunications services to all Indians. The findings underscore the need for thorough investigations and accountability measures to prevent similar lapses in the future, securing the public's financial interests and the integrity of governmental operations. By prioritizing transparency, efficiency, and ethical conduct, BSNL and other government entities can strive towards a more responsible and sustainable future, ensuring that public funds are utilized effectively and for the benefit of all citizens. This incident underscores the critical importance of robust oversight and accountability mechanisms within governmental organizations, ensuring that public resources are managed effectively and ethically. The discrepancies reveal the necessity for strengthening internal controls and promoting a culture of transparency and responsibility across all levels of governmental operations. By addressing these shortcomings, organizations can safeguard public funds, maintain public trust, and uphold the principles of good governance.
Source: BSNL Lost Rs1,757 Crore by Not Billing Reliance Jio for 10 Years: CAG