Ailing telecom firm BSNL has lost the mandate for rolling out mobile service project in Arunachal Pradesh and two districts of Assam on recommendation made by an inter-ministerial panel headed by Niti Ayog CEO Amitabh Kant. The project was funded through Universal Services Obligation Fund (USOF) -- which was formed by the Centre to help fund projects in rural areas -- with an outlay of Rs 1,460 crore.

The panel has recommended deployment of 4G services in both the states under the project. BSNL has been demanding spectrum for 4G services from the government but its request is yet to be approved.

"That committee apart from CEO Niti Ayog has secretaries from Meity, Department of Economic Affairs. That committee recommended to go for 4G because digital connectivity is going to be very important in future. USOF will be coming out with competitive tender to select a service provider there," Telecom Secretary Aruna Sundararajan told reporters after the panel's recommendation was approved by the Digital Communications Commission (DCC) on Wednesday.

The Union Cabinet had approved mobile network connectivity in north eastern states in four packages. This included one part given to state-run BSNL for rolling out 2,817 mobile towers on nomination in Arunachal Pradesh and two districts of Assam, with a total outlay of Rs 1,460 crore.

"As far as this package is concerned it was given to BSNL on nomination basis. There has been very little progress on this tender because of, one, there has been large number of litigations and after that the terrain has also been difficult so survey etc has taken a long time," Sundararajan said.

She said a committee was constituted under the chairmanship of CEO Niti Ayog to look at this whole project and see how to ensure that there is good quality connectivity particularly in these areas which are strategically important for the country.

The tender was allocated to BSNL in 2016 after none of the companies placed their bid for the project.