No Insurance Cover
available if Paksat-1 is lost in operation
Pakistan forced
to spend millions for a make-shift Satellite
Special
SAT Report
ISLAMABAD:
Pakistan is to spend millions of dollars, and risk without insurance,
most of these millions, to keep its allotted space for a satellite
in orbit, just because governments in Islamabad did not give proper
attention to the matter in time.
In
a great hurry the Ministry of Science and Technology has signed
a contract with the US Hughes company, a giant in launching of
satellites, so that a temporary short-life, used satellite is
placed at the allotted spot, named as Paksat-1, by April next
year.
A
Hughes spokesman told the SA Tribune the project was
on schedule and the satellite purchased by Pakistan has a life
of 6-7 years but the agreement with Pakistan will expire in five
years. “Either Pakistan will have to renew the agreement
or buy a new satellite,” the spokesman said.
The
Ministry argues that it was in Pakistan’s interest to occupy
the orbit space 38E as four similar spaces allotted to Pakistan
by the international body in the past year went unutilized and
were lost. If this spot is not used, Pakistan may never be able
to enter satellite technology era for its own strategic, defence
and commercial goals. View Cabinet Summary Page1
| Page2 | Page3
| Page4
Teams
will soon be sent to Russia to look for a new satellite which
may ultimately replace Paksat-1 in the same orbit space.
The
US company Hughes, which will move the satellite from its present
position to the Pakistani space, has put tough conditions which
cost millions of dollars, but Pakistan has accepted these terms.
According
to documents available with SA Tribune, Hughes will charge a one-time
Service Establishment Fee of $4.1 million. This fee will cover
the satellite operating costs until it reaches the allotted slot
by January 2003, establishment of necessary ground infrastructure
to control and operate the satellite through two ground stations,
one located in Australia.
Surprisingly
Hughes price for this relocation of the satellite includes the
cost of obtaining an insurance cover for this $4.1 million but
there are certain exclusions also involved and Pakistan has been
told that if anything goes wrong and the satellite does not reach
its orbit as desired, Pakistan will have to bear the loss.
This
means that not only will all the fees and charges paid will be
wasted, Pakistan could also not be able to place another satellite
in its allotted spot in the remaining short time and thus could
be shut out of the space use through satellites for ever.
“Loss
of the Satellite during the (relocation) move will not result
in any insurance payout and Pakistan will not receive any reimbursement,”
Hughes has clearly stated in its documents.
The
Annual operating Fee to be charged by Hughes is $2.65 million
and this payment will have to be made when the satellite reaches
its contracted orbital location of 38 degree East. This fee will
be good for one year and a similar amount would be due in early
2004.
The
Annual Lease payment for the satellite is $ 2 million and this
payment is also to be made immediately after the satellite reaches
its contracted location. The lease payment allows the Government
of Pakistan to lease the full capacity of the satellite for a
year when another payment of $2 million would be required.
Hughes
is to charge another $250,000 for coordination support. Under
this clause Hughes will assist and support Pakistan in frequency
coordination. This will consist of a detailed technical analysis
of Paksat-1, development of a strategy for coordination negotiations,
drafting of operating agreements between Paksat-1 and neigbouring
filings of Russia, France and Greece and subsequent negotiation
of coordination agreements with the same. In addition any correspondence
required by the ITU with other countries will be included. No
assistance is contemplated on any of these activities after April
19, 2003.
Hughes
also offered Pakistan a Revenue Sharing Arrangement, in lieu of
the Lease Payments, in which Hughes was to be take 60 per cent
and Pakistan 40 per cent up to the initial $5 million in gross
revenues. Then the share reverts to 50 per cent each.
Besides
this Hughes will also train a Pakistani engineer in US and charge
$50,000 for this training.
The
Finance Ministry had serious doubts on the ability of the Ministry
to market the transponders which will become available when the
satellite gets into the Pakistani orbit. It rejected the Hughes
offer of sharing the revenues on 60-40 basis saying the “The
Finance Ministry does not have the know how or experience of marketing
of transponders,” Secretary General of Finance Mueen Afzal
wrote to the Science and Technology Minister immediately after
the matter was discussed in the Federal Cabinet last July.
To
cover itself, the Finance Ministry clearly told the Science Minister:
“Today I discussed the issue further with the Finance Minister
and he felt that I should once again write to you to point out
that since the Cabinet has taken a decision yesterday on the issue,
it will now be imperative for your ministry to ensure that the
marketing of transponders, as soon as the satellite has been launched,
should be in line with the assumptions made in the sub-committee’s
report..”
This
letter dated July 4, 2002 was sent by the Secretary General Finance
Mueen Afzal to Dr. Atta ur Rehman, Minister of Science and Technology,
Finance Minister Shaukat Aziz, the IT Ministry and the Cabinet
Division. Click
to view Letter
