ISLAMABAD: The federal government informed the Supreme Court on Thursday that an amount of Rs62 billion had been lawfully transferred to the federal consolidated fund (FCF) from the universal services fund (USF) after necessary amendments to the relevant law.

“The funds were placed from the Ministry of Information Technology-USF account to the FCF of Ministry of Finance in pursuance of the Economic Coordination Committee’s decision and the federal government issued necessary notification for amendments to the USF Rules 2006,” said a statement submitted by the IT ministry to a three-judge bench headed by Chief Justice Iftikhar Muhammad Chaudhry.

The court had asked the ministries of information technology and finance to justify the transfer of USF funds to the FCF on a petition filed by Khurram Shehzad Chughtai, an IT expert.

The petitioner had regretted that the entire telecommunication sector in the country was running unbridled and without effective regulation because the Pakistan Telecommunication Authority was virtually non-existent. He also sought a court order for the government to complete the process of auctioning 3G licences within 60 days in a transparent manner and deposit its proceeds in the federal treasury.

Advocate Ali Raza, representing the petitioner, had informed the court that the transfer of Rs62bn from the USF to the FCF had been made through an executive order. “The funds cannot be used [for] other than the telecommunication sector,” he contended.

In its statement submitted on Thursday, the IT ministry said the existing rule was substituted by the one stating that “the USF shall be kept in the FCF and the ministry of finance shall release funds of the USF, in accordance with procedure laid down in these rules, through budgetary mechanism”.

It said the USF was being used in accordance with the relevant rules suggesting that the USF could exclusively be utilised for providing telecommunication services to people in un-served, under-served, rural and remote areas by the federal government in a transparent manner.

Finance Secretary Dr Waqar Masood also informed the court that the USF money had been transferred to the FCF after amending the relevant rules.

But Advocate Raza argued that under the constitution only the money generated through revenue could be deposited in the FCF while the USF was deducted from the income of mobile operators and meant for welfare of the people living in remote and underdeveloped areas.

The court asked the finance secretary to submit a reply by August 6. It directed the cabinet division secretary to submit his comments on the auction of 3G spectrum and give reasons for its delay.

The IT ministry said the process of 3G licence auction was being reviewed.

The government wants to hold early auction of not only 3rd generation technology but also 4G and long-term evolution technologies.

The ministry said it had issued a policy directive for the auction on Dec 19, 2011. Subsequently, the PTA initiated the process of hiring consultants, but it was stopped on the instruction of the auction supervisory committee. The process was again initiated in November last year, but it could not be completed.

The IT ministry said the spectrum being auctioned represents three blocks of 10Mhz each in the 2100Mhz band. In view of the previous expressions of interest received at least five blocks could be auctioned for ensuring competition or alternatively raising the base price of the spectrum, the ministry said.