CAG report 'erroneous', no loss due to 2G allocation, says Sibal

Communications minister Kapil Sibal today said the recent report of the Comptroller & Auditor General (CAG) was “erroneous”, and the government had not made any losses on awarding new licences and allocating 2G spectrum in 2008 as projected in the report.

“The CAG report is erroneous. The logic of calculating the loss of over Rs 1,70,000 crore by the government is flawed and there is a mistake in the way they calculated it. To err, of course, is human. But the fact is that there is no actual loss by the government,” he told a press conference here.

Sibal also said CAG did not understand technical issues and that had been the key to its miscalculations.

In a damning report in November last year, CAG had said the government had incurred a notional loss of over Rs 1,70,000 crore by issuing new licences and spectrum in 2008, as it did not follow the procedure for offering spectrum at prices fixed in 2001. It had calculated the notional loss based on the price which companies paid during the auctioning of 3G spectrum during May-June 2010, saying the two should be equated.

The controversial report was one reason behind the resignation of former communications minister A Raja, amid allegations that he was involved in a huge scam which led to losses to the exchequer.

Sibal’s indirect defence of Raja comes at a time when the Central Bureau of Investigation was investigating links between the former minister and the various telecom companies he allegedly favoured in awarding licences and airwaves.

Sibal admitted “procedural lapses” in implementing the licencing policy and that he would take action if evidence was found.

CAG declined to respond to Sibal’s criticism, saying a decision on the report was a matter for Parliament to decide. “Once submitted to Parliament, CAG reports are the property of the Public Accounts Committee. No one in CAG can comment on any observations made on the report,” a CAG official said.

Explaining how the government made no loss, Sibal argued: “There is a clause in the licence that each service provider has to pay for spectrum beyond 6.2 MHz. Only, those fees would be decided by the government. However, no decision on that has been taken. So, CAG cannot presume any loss, as the price of the 2G spectrum is not decided.”

CAG, however, valued the price of the entire spectrum, including 4.4 MHz which comes as start-up bundled with the licence. Any additional spectrum currently is given based on subscriber numbers.

Sibal also said as e 3G spectrum was three to four times more efficient than 2G, the prices could not be equated as CAG has undertaken to do. Also, the value of spectrum in 2008 could not be equated with a price of an auction held two years later in 2010, he maintained.

The minister attacked the NDA government again, saying its policies, including a shift from fixed licence to revenue share, had led to a notional net revenue loss of over 1,50,000 crore.