State-run BSNL may get an additional Rs 5,503 crore from the Department of Telecom to establish an alternate communication network for defence services, enabling the vacation of spectrum by the Armed Forces.

The budget estimate approved by the Cabinet Committee of Infrastructure (CCI) for this purpose in December, 2009, was Rs 8,098 crore. The total cost of the project, including two years’ maintenance support by BSNL after the network is fully integrated, is Rs 13,601 crore, according to sources in the DoT.

Thus, the additional impact on the estimated cost of the project would be Rs 5,503 crore, inclusive of all duties and taxes and two years’ maintenance support, over-and-above the Rs 8,098 crore expenditure earlier approved by the CCI, they added.

As per the CCI approval, the project was to be implemented in 36 months (completion by December, 2012). However, the timeline is to be decided afresh because of delays in implementation.

A Memorandum of Understanding (MoU) between the defence and telecom ministries for vacation of spectrum was signed two years ago and both the ministries were supposed to achieve certain targets in a time-bound manner.

The defence services had vacated 3G frequencies in August, 2010, after they were assured by the Centre that the telecom department would roll out this alternate network within two years. BSNL had submitted a revised estimate of Rs 13,334 crore for this network on August 12, 2011.

In addition, the telecom services provider said that it would have to spend about Rs 267 crore for maintaining this network for a two-year period, taking the total cost to Rs 13,601 crore. The BSNL proposal was also placed before the inter-ministerial group overseeing the project, which in turn had sent it to the Defence Ministry.

In its reply, the Ministry of Defence (MoD) has warned that the project must be completed at the earliest as it was of critical importance to the nation. The MoD has constantly expressed concerns over the slow place of construction of the alternate network for the armed forces.