The Auditor General of Pakistan (AGP) has detected misappropriation, irregularities, mismanagement and operational inefficiencies of over Rs 122 billion in Pakistan Telecommunication Authority (PTA). The audit report on the accounts of Telecommunication Sector for Audit Year 2015-16, a copy of which is available with Business Recorder, detected short deposit of surplus Rs 3015 million into the Federal Consolidated Fund, less realisation of Rs 1418 million revenue due to wrong calculation of demand notes, unlawful payment of conveyance allowance of Rs 35 million at enhanced rate.
The report also detected over Rs 100 billion loss to the Public exchequer due to illegal usage of 4G LTE services by two telecom companies. A loss to the national exchequer of Rs 2000 million due to negligence of PTA was also detected in the report. The AGP report unearthed Rs 15.8 billion loss due to non-recovery of outstanding initial license fee and annual regulations, Rs 1979 million loss due to non-recovery of outstanding dues on amount of R&D contribution, Rs 3.9 million loss due to non-recovery of outstanding dues on account of annual license fee.
PTA management unlawfully allowed M/s Warid for provision of 4G LTE services to public at large. M/s Warid was neither a Next Generation Mobile Services (NGMS) license holder nor participated in the auction of NGMS. This resulted into loss of Rs 51,692 million (US $306.920 + 210 million) to the national exchequer.
The matter was reported to PAO and management in September 2015. It was replied that according to clause 5.1, the Mobile Cellular Policy 2004 the Mobile Cellular Licenses will be technology neutral, which permits the licensees to use any technology, in line with the international standards, in their assigned spectrum. After detailed in house deliberation, M/s Warid Telecom was permitted to provide LTE based services. The reply was misleading; therefore, not tenable as M/s Warid Telecom did not participate in the auction of Next Generation Mobile Services (NGMS) held by PTA and had not obtained a license for use of 3G and advance technology. Further, the Federal Government is the competent authority for issuance of policy directives but in this case the Federal Government was not taken on board and PTA itself permitted the operator for provision of unlawful services of 4G LTE services. Therefore, Audit recommends that matter should be investigated, responsibility be fixed and disciplinary actions be initiated against those who granted permission to M/s Warid for provision of 4G / LTE services and not getting approval from the Federal Government under intimation to Audit.
Section 5 sub section (2) of Pakistan Telecommunication (Re-organisation) Act, 1996 states that in particular, and without prejudice to the generality of the foregoing power, the Authority shall grant and renew licenses for any telecommunication system and any telecommunication service on payment of such fees as it may, from time to time specify and all of its decisions and determinations are made promptly, in an open equitable, non-discriminatory, consistent and transparent manner. Furthermore, Rule 23 of GFR Vol-I states that every officer should realise fully and cleanly that he will be held personally responsible for any loss sustained through fraud or negligence on his part.
PTCL is providing 4G LTE Tablets, Charji Evo Tab and Chanji Evo Cloud device to its customers without buying spectrum in 3G / 4G (NGMS) auction. This resulted into loss of Rs 42,600 million to the national exchequer as PTCL did not participate in the auction of NGMS. On the other hands, M/s Zong had paid the above mentioned amount during auction for provision of these services.
The matter was reported to PAO and management in September 2015. It was replied that licenses issued under the Deregulation Policy 2003 were technology neutral. Licensees could, therefore, deploy any advanced Technology while following the terms and conditions of the License.
The reply was misleading, therefore, not tenable as PTCL was providing 4G LTE services without getting license for the purpose. DAC in its meeting held on 11th January, 2016 directed PTA management to provide final outcomes of the court case regarding provision of 4G / LTE services to DAC and Audit. No further progress was intimated till finalisation of this Report.
Therefore, Audit recommends that the matter should be investigated, responsibility be fixed and disciplinary actions be initiated against those held responsible for allowing PTCL to operate 4G LTE services. Moreover the loss of Rs 42,600 million be recovered and deposited in the FCF under intimation to Audit. According to the report, the PTA management failed to cancel the license of M/s DV Com upon non fulfilment of its rollout obligations and granted extension in its obligatory period up to 04.07.2007 and again up to 3 1.12.2008. Hence, obligatory period of 18 months was extended for a period of more than 4 years. Further, PTA Authority allowed M/s DV Com for subletting its license to its subsidiaries which is unlawful in violation of the para 4.4 of the Deregulation Policy 2003. This resulted into irregular sale of spectrum and loss to the national exchequer of Rs 2,000 million.
M/s Telecard acquired Wireless Local Loop (WLL) license for 14 telecom regions in 2004 through an open auction. The company deposited an amount of Rs 1,585 million as 50% of initial license fee on winning of bid. PTA issued license to Telecard without collecting remaining 50% obligatory amount. The company along with other representatives of WLL sectors made presentation before the Prime Minister of Pakistan and Economic Co-ordination Committee, Cabinet Division. PTA management could not plead the case properly and as a result the ECC, granted four (04) years moratorium to WLL Operators for staggering of balance payment.
After expiry of four years period, M/s Telecard was required to deposit the remaining 50% payment on 17th March, 2010 as per the decision of ECC but the company failed to deposit the said amount. M/s Telecard approached PTA with the request that company has sold its 100% shares to PTCL and PTCL will deposit the outstanding dues. The company further requested that license may be transferred in the name of PTCL. PTA instead of terminating the license and re-auctioning the spectrum; accepted the proposal causing a heavy loss of revenue to the National Exchequer.
Audit recommends that a high level inquiry be conducted into the matter to find out as to why M/s Telecard was allowed to operate despite of non recovery of Government dues, causing loss of Government revenue of Rs 1,585 million. Moreover, responsibility be fixed and disciplinary action be taken and amount be recovered from the persons held responsible and credited into FCF under intimation to Audit.
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