BSNL to make staggered payments for Rs 6k cr contract

State-run PSU BSNL has said it will make staggered payments to equipment suppliers under its estimated Rs 6,000 crore, 15 million GSM lines contract upon achievement of fixed milestones.

The PSU has adopted a "reverse auction" model for selection of vendors.

A reverse auction is a type of auction in which the company that floats the tender fixes the upper limit of the contract and interested parties participate in a series of rounds in which they submit offers lower than the ceiling contract value and those of the previous round until a single party emerges as the lowest (L-1) bidder.

"This will keep the non-serious players out and also it will be difficult for vendors to form a cartel," a senior BSNL official said, commenting on the progress of its 15-million GSM line tender for an estimated investment of up to Rs 6,000 crore.

"The new tendering process has deferred (staggered) payment, in which when the party will achieve the different milestones set on mutually agreed terms, then only BSNL will pay the amount to the vendors," a source said.

Over the past four months, BSNL has been doing all of its procurement through the reverse e-tendering mechanism.

According to telecom market experts, the 15 million GSM line tender is estimated to be worth around Rs 5,000-6,000 crore.

Asked whether the tendering process was as per schedule and was facing some hurdles, BSNL CMD R K Upadhyay had said the process was on and there was no plan to scrap the tender to procure equipments for the East, South and North zones.

BSNL, which offers telecom services in all areas of the country, barring Delhi and Mumbai, had 95.14 million mobile subscribers as of July 31 and is making efforts to catch up with its private counterparts.

The PSU has been at loggerheads with private operators on payment of interconnect usage charges and has threatened to snap lines in case private players do not clear dues of over Rs 165 crore, a claim that has been contested by the telecom companies.