Ishaq Dar Portrays USF Projects as Government Financed Projects in Federal Budget

In a strange and usual move, Mr. Ishaq Dar, Finance Minister, mentioned Universal Service Fund projects in his federal budget speech and portrayed that such projects — worth billions of rupees — were financed by the federal government, which is clearly not the case.

Mr. Dar said that more than Rs. 12 billion are being spent on establishment of “Universal tele-centres”, while another Rs. 2.8 billion are spent on laying of fibre optic cable to connect 128 tehsils in the country.

He further bragged about Rs. 3.8 telecom projects for rural and far flung areas of Pakistan.

Mr. Dar tried to portray that all these projects were financed by federal government, however, the reality is that such projects are powered by Universal Service Fund, an independent company that is funded by 1.5 percent of annual revenues of private telecom companies.

Also Read: Who is Ishaq Dar to Approve Universal Service Fund Projects?

This is not the first time that Mr. Dar and his party has taken the credit for the projects of Universal Service Fund, in fact the whole of Universal Service Fund is hijacked by the ruling party and is used for its self projection which is against the SECP and ECP regulations.

The truth is that Mr. Dar and his government didn’t allocate a single penny in the federal budget 2015 for ICT development, mushrooming of entrepreneurship or the development of digital ecosystem or anything at all for information technology and telecom sectors.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK

  • ZeeshanShahid

    Dear Aamir, I respect your forum a lot but lately I feel it has been becoming the political mouthpiece of the telecom industry. I hope I’m wrong. Regarding this post, USF gets funds from telcos because the telcos are bound by the Pakistan Telecom Act to make the contribution. The funds are a collection diverted on the Act of Parliament to an organization setup by the Government itself for a defined purpose. Ministry of Finance has every right to claim the projects of USF as a utilization of funds by the government. I would have shared more information with you if I had the time to do so but I’m sure you can easily corroborate the point I have made.

    • ZeeshanShahid

      Please see this condition of the Telecom Infrastructure Provider license form.

    • aamir7

      Yes, right. So he should also get credit for all the network rollouts too, despite they are owned by privately held telecom companies but since these companies are governed by a Pakistani law, legislated by parliament.

      I am sorry but either you are in deep sleep or you are paid to write this comment.

      Yes, he can brag about the policies after which the telecom network rollout (or the USF spendings for that matter) was made possible, but he can’t call them government projects. This is criminally wrong.

      • ZeeshanShahid

        Wow, a knee-jerk reaction. I expected better. And I’m offended to be called a paid actor for PMLN, as any rational individual should be.
        About your comment, your logic is flawed. USF is a mandatory contribution sanctioned by the government. In a normal taxation cycle, government collects and then invests based on spending plan, In the case of USF, government has directed the utilization of a defined amount to be collected. In a nut-shell, USF contribution is a regulatory payment, just like income tax. The usage of USF fund is as per the requirements of the law. Telcos oblige, they cannot avoid the payment and they cannot decide what USF does with it. USF is also not independent of the Ministry with regards to utilization of fund.

        • aamir7

          Now read this carefully please:

          Network rollouts by telecom companies are also mandatory and sanctioned by the government of the land, and it is clearly defined in the license term the amount of minimum network an operator has to rollout to avoid license cancellation.

          So, as per your analogy Mr. Dar is allowed to call that Pakistan spent multi billion dollars for telecom network rollouts.

          Secondly, and more importantly for you to understand, at USF fund the collection is mandatory and decided by the law, but the spending is an in-house affair of a private company that has its CEO, board members who decide the spending. It’s not anyone’s job or role to decide the spending.
          If USF decides to not to spend a single penny, you simply cannot question it. Yes, you can lobby to stop it’s funding but you can’t force it to do something of your own will. That’s how this company was designed.

          But since board members include stakeholders from the industry, ministry, PTA, such situation is never expected to arise.

          But again, any spending by USF is entirely internal affair, and no one can change this fact.

          • ZeeshanShahid

            Dear Aamir,

            I did not want to come off at an adversarial position but I believe your reaction is partly due to my choice of words in my original comment (i.e. political mouthpiece of telcos). I take my words back and hope you will investigate and speak up about the dark aspects of the telcos ranging from the sales tax issues, 3G/4G license fee payments, QoS issues disguised with minute for each dropped call type marketing campaigns etc.

            Having said that, I would like to repeat that I stand by the point that Minister is rightful in claiming USF utilization as a Federal Government activity. I understand that the majority of the audience of this forum may not be familiar with corporate laws so the following is not to judge or to make a statement, just to share the statutory basis of the statement.

            There are two things: USF Fund and USF Company. The Fund is very much under Federal Government’s control which approves the budget prepared by the Board of the USF Company and releases the funds for the projects. The source of funding is more than just telco’s contributions. Below I’m reproducing some extracts of Pakistan Telecommunication (Reorganization) Act, 1996 and USF Rules 2006 that govern the basis of Minister’s statement. Hopefully you’ll consider these to enhance your article.

            Pakistan Telecommunication (Reorganization) Act, 1996

            33A. Establishment of USF.-(l) As soon as may be, after the commencement of the Pakistan Telecommunication” (Amendment) Act, 2006, the Federal Government shall, by
            notification in the Official Gazette, establish a Fund to be called the Universal Service Fund hereinafter referred to as USF.

            (2) The USF shall be under the control of the Federal
            Government and therein shall be credited any sums of money
            mentioned under sub-section 4.

            (3) The balance to the credit of the USF shall not lapse at the end of the financial year.

            (4) The USF shall consist of-

            (a) grants made by the Federal Government and the Provincial Governments;

            (b) prescribed contribution by licensees;

            (c) sale proceeds from the auction of the right to use radio spectrum;

            (d) loans obtained from the Federal Government; and

            (e) grants and endowments received from other agencies.

            33B. Administration and utilization of USF.-(l) The Federal Government shall have the power to administer the USF in such manner as may be prescribed.

            (2) The USF shall be utilized exclusively for providing access to telecommunication services to people in the un-served, under-served, rural and remote areas and other expenditure to be made and incurred by the Federal Government in managing USF.

            (3) The Federal Government shall be responsible for the co-ordination and ensuring timely utilization and releaseof
            sums in accordance with the criteria as may be prescribed.

            USF Rules 2006

            Rule 3(2):
            “The USF shall be kept in the Federal Consolidated Fund and
            the Ministry of Finance shall release funds of the USF, in accordance with the procedure laid down in these Rules, through budgetary mechanism.”

            2. (xxv): “USF company” means a company limited by guarantee to be constituted under the Ordinance by the Federal Government to perform such duties and functions as may be assigned to it under these rules;

            3. Management and control of Fund

            –1. The Federal Government shall have the possession, management and control of the Fund, its income, undertakings, properties and assets.

            –2. The Fund and all accretions thereto from time to time shall be held in a bank account opened and maintained in the name of the Federal Government with a scheduled bank as the Federal Government may from time to time, determine;

            –3. The USF contributions shall be credited directly to the Fund account by the licensees or in any manner as the Federal Government may determine,

            –4. The Authority shall monitor and enforce the obligations of the relevant licensees to make the USF contributions in a timely and proper manner,

            –5. The Federal Government may;

            —-a. Maintain proper books of account for the fund;
            —-b. Have custody of the account books, cheque books, securities, investment instruments and other documents and papers pertaining to the Fund and the Fund Accounts;
            —-c. Determine, make, monitor and liquidate investments and make reinvestments of surplus sums standing to the credit of the Fund account;
            —-d. Make shall make quarterly releases to the USF company as per the approved budget of USF not later than fourteen days before the commencement of each quarter;
            —-e. Nominate one or more signatories to the Fund Account;
            —-f. Address all matters related to the audit of the Fund;
            —-g. Co-ordinate with relevant licensees and the Authority on matters related to contributions to the Fund.

            5. Collection of USF contribution

            –1. The Federal Government may require licensees directly to deposit USF contributions within the period prescribed in their licenses or may require them to deposit USF contribution on quarterly basis during the running financial year on estimated annual gross revenues subject to adjustments at the end of the financial year, and APC for USF in accordance with AP Rules or direct Authority to collect and remit USF contribution and APC
            for USF to the Fund’s designated account without any deduction within one month of receipt.

            6. Utilization of Fund

            –1. The amount credited to the Fund shall be utilized for:

            —-a. Provisioning of telecommunication services, telecommunication systems or electronic services for use in unserved and underserved areas of Pakistan;
            —-b. meeting administrative budget of the USF company including salaries of the employees; and
            —-c. any other act as approved by the Federal Government; but not inconsistent with the Act and these rules.

            10. Creation of USF company

            –1. The Federal Government shall within sixty days of the commencement of these rules cause incorporation of a
            USF company limited by guarantee in accordance with the Ordinance. The Federal Government may within seven days of such incorporation transfer an amount of fifty million rupees in the account of USF company to enable it to meet its initial needs and capital expenditure.

            –2. The Secretary Information Technology, and two officers of the Federal Government nominated by the Secretary shall
            subscribe their names to the memorandum and articles of association of the company.

            11. Composition of the Board

            –1. The Board shall consist of the following namely:

            —-a. Minister for Information Technology; Chairman
            —-b. Secretary Information Technology; Vice Chairman
            —-c. Member Telecom, Ministry of Information Technology; Member
            —-d. Chairman of the Authority; Member
            —-e. Nominee of fixed-line licensees; Member
            —-f. Nominee of mobile cellular licensees; Member
            —-g. Nominee of data licensees; Member
            —-h. Representative of consumer groups; Member
            —-i. Chief Executive Officer; member

            15. Powers of the Board:

            –1. The Board shall have the full powers to efficiently administer and manage the affairs of the USF company.

            –2. Without prejudice to the generality of the foregoing powers, the Board may:

            —-g. Approve annual budget of the Fund, request Federal Government for quarterly releases from the annual budget of the Fund and provide guidelines for financial controls;
            —-h. Propose changes in the USF policy of the Federal Government

            16. Budget:

            –1. The Board shall, in respect of each financial year, prepare and approve its budget. The Board shall also prepare budget of the Fund and submit it for approval of the Federal Government.

            –2. Both the budget statements shall specifically state the estimated receipts and expenditure and the sums which are likely to be required by the Fund from the Federal Government and by the USF company from the Fund for each financial year:

            Provided that the annual budget of the USF company shall not exceed five percent of the total annual budget of the Fund for that financial year.


        • Pakash

          @ Zeeshan Shahid,
          The point is govt can not take credit for something they did not practically contribute an iota in terms of time and resources and merely legislated and regulated for. Instead of defending the govt u and trying to prove that they were responsible for the fund u should accept there mistake. It is very easy to label some one as political to prove your flawed point which only shows that you did not have enough material to prove the OP wrong. I only wish the day that people stop defending every crap coming out of there favorite political personalities.

          • ZeeshanShahid

            Don’t state the “point” when you refute with equal dearth of supporting evidence. And please don’t “presume” political affiliation when these are not only not implied, but also specifically denied in the follow-up comment. Do read the reply above for legal insight (it has links so waiting moderator approval).

            • Pakash

              Mr Zeeshan Shahid Sab, I don’t have to “prove” a simple case of common sense which u r trying desperately to prove otherwise by dragging those so called “proofs” or clauses out of “universal service fund contributions” in the process.
              U denied to political affiliations and we should all “presume” that u volunteered here to correct this specific matter in the “love” of govt or probably Mr Dar, or may be correcting whatever is expressed wrong about IT and Tel Budgets anywhere on the Internet is ur hobby. LOL
              Do u really think by quoting legal clauses and complicating a simple matter by using uncommon words will somehow prove ur point to be correct and people are so naive to believe it, and btw using thick words here and there does not prove that u r right it just proves that u can consult a thesaurus ;)
              Its ur kind of people that tell these lunatics sitting in the ministries about all the immoral practices are okay to go by without doing any thing practical on the ground.

              • ZeeshanShahid

                You’re clearly unaccustomed to educated debate.
                As’salam o alaikum.

      • Dr. Aamir Liaquat Hussain

        isko main nahi laya ider bhai isliye paid kehna chor do.
        dekh lo baqi log b samaj rahay apki political motivation.
        paid to ap ho jo baten nikal k news banaty ho. Farhan Virk k baad apho jis py taras ata boht.

        • aamir7

          You can stop trolling.

          • Muhammad Aamir

            The comment can be paid that you featured in the Axact story. I really hurt that time because you featured the comment without any research and investigation.

            • Abid Sultan

              Yes, he promoted a comment and many of us noticed it.

            • Dr. Aamir Liaquat Hussain

              baray gilay shikway :D

        • Pakash

          @ Dr. Aamir Liaquat Hussain,
          It seems like the only part u understood from the above discussion was “Political Motivation”.
          Agar parahy likhay banday kissi topic par behas ker rhay hon to aap or aap jasey logon ko apni chonch band rakhni chahiye kyoun k issey sey apki qabliat ka pol khul jata hey bhai sab
          or secondly Aap ke logic k mutabiq agar koe bhala manas govt ke kissi “CHWAL” ko point out kerey to wo political hogya wah wah subhan ullah “Lao bhai inkey liye Ittifaq walon ka sarya”

          • Zaryab

            What is a fake degree holder Amir liaqat doing on this forum. Shouldn’t he be yelling taking part in one of those victim protests outside Axact office? Mardana zubaida aapa. Jithey wekho monh chukk ke wurr janda ae. Kadi mqm, kadi alam online, kadi lokaan de bachay wechan nu phirda ae, kadi bandran wangar nuch nuch ke motor cyclan wechda ae. He portrays as Jack of all traders. Rather Jackass. This is a robust technical discussion going on here. And the Scum has protruded his kb sized brain herehtoo. Tsk tsk

  • Zawyar Ur Rehman

    Aamir bhai? Ye telecom projects 3.8 rupees mein kb sey honey lg gaye??? Rural areas me tou iss se zyada hi paisey lgtey hein i think telecom services laney/run krney k liye…

    • aamir7

      Yeh region wise hotay hain projects, aur phase wise. USF website should have all the details of areas and scope of projects.

      • Taha Najam

        Whoosh. His point was you missed a billion there and just wrote Rs. 3.8.

        • Zawyar Ur Rehman

          Hehe, taha bhai, aap smjh gaye… lekin aamir bhai kuch zyada hi agey ki sochney lg gye XD

      • Zawyar Ur Rehman

        Aamir bhai, chlo me ap ko 5 rupees deta hu, zra mujhe meri apni telecom company dilwa dein XD

  • Umar Shahzad

    I think amir has started using his blog to express his political thoughts!!!

    You need not to mind.

  • Pakistani Bacha

    Pata ni iss mulk kab parhy likhay log Ministers bany gy. Aisy JAHILOOON k hath mai budget dya jaye to ga to wo Cars sasti he karain gy.

  • anas qamar

    Seeing the comments, I am really surprised at what the reaction of many people is as compared to what it should be – considering the fact that one must be supporting what’s good (even if it is against their own party). The author clearly mentioned the story from an unbiased point of view regarding the false claims made by the Finance Minister. The Finance Minister clearly gave the credit to the federal government which it did not deserve. But, alas – when people become slaves to their own party, even if its worth the cost of intellectual dishonesty, they have a hard time deciding whether to support Pakistan or their own idols.

    • Vinod

      lol !
      Anas Did You Really Not Listened To Ishaq Dars Speech ?
      Don’t you really know About These So Called Jaahil Minister’s !
      Do You Really Think they are Spending Money on Project’s ?
      Just Wanders around ten Cities and Look in Some Departments(Government Sectors) of Town ! if Not Just One City Karachi !
      Whats the real reality ! Where are Funds Going Who is Playing Real Game Here !
      Do you Really Think there are wise people in Government Sectors To Use Fund For Right Works ??????????

      • Taha Najam

        Uh…both of you are saying the same thing as you so I don’t know what you’re so pissed about.

      • anas qamar

        Exactly. Some PMLN apologists, for the sake of their own party, are ready to believe in the bullshit spewed by these Ministers. :)

  • Aadil

    Good work.

  • Zubair Gu

    Insha ALLAH, In zalimoo ka waqt khatam ho jana hai.

  • HassaanM

    A classic case of hypocrisy. While ProPakistani lifts half its stories from MoreMag and portrays them as their own,

  • aamir7

    As per your clauses, that you shared here… nothing comes from Government’s fund to USF. All the money comes from telecom operators, you can check. Yes, it can get funds from government, but it never required so far.

    USF fund and USF money are same things. USF is company, that uses funds at its own, based on its internal decisions.

    About clauses about USF’s money putting in national consolidated fund ==> these clauses are never approved by NA and senate and hence its not part of law Its just matter of time that these clauses are challenged in the court.
    And lastly, as your one clause said: “The Board shall have the full powers to effi ciently administer and manage the affairs of the USF company.”
    This proves that company is independent and can use funds at its own and government as no role to play for the utilization of funds.

    • ZeeshanShahid

      The clauses highlight the intricate nature of the operations. The USF Fund is a “Special Fund” as per the Act mentioned above. Government wants to put it in NCF so it can route the spending for their nefarious purposes which led to the recent referencing to NAB by some board members. The point here is that it is interlinked. USF might not be rightful in claiming all efforts/projects as its own and not a result of the Public-Private partnership setup as per government policy. Similarly, Ishaq Dar sb should have appreciated the private partnership aspect of this arrangement as well, but that would be expecting too much considering certain other misstatements such as circular debt which has accumulated again to over Rs. 600 billion but quoted as Rs. 250 billion in the Economic Survey just because Rs. 350 billion got parked in a power holding company.