Govt cancels Devas S-band deal

The government on Thursday officially scrapped the controversial S-band spectrum deal between Antrix, the commercial arm of Indian Space Research Organisation (Isro), and private firm Devas Multimedia. The decision to annul the deal was taken at a meeting of the Cabinet committee on security (CCS), chaired by Prime Minister Manmohan Singh, here on Thursday.

The annulment comes in the wake of a controversy over the deal, which according to estimates may have resulted in a notional loss of Rs 2 lakh crore to the exchequer.

Devas said it had not received any formal communication from the government on a cancellation of the deal. “We are still awaiting formal communication from the government on the status of our contract,” the company said hours after the CCS decision.

Although the Devas management declined to comment on Thursday, the company had said yesterday that its deal with Antrix was “legally binding” and that it could take action -- including legal steps -- if its deal on the allocation of S-band spectrum was annulled.
 

UNDONE DEED

Mar ’03: Devas presentation to DoS, Isro, Antrix officials

Dec ’04: Antrix board nod to spectrum lease by Devas

Dec ’05: Cabinet approves lease of S-band capacity

Nov ’08: Letter from Antrix supporting Devas trials

Jun ’10-Jan ’11: Reviews of security, strategic applications 

Feb ’11: Centre cancels deal citing national priorities

On the CCS decision, Law Minister M Veerappa Moily said, “Having regard to the needs of the country’s strategic requirements, the government will not be able to provide orbit slot in S-band to Antrix for commercial activities, including for those which are the subject matter of existing contractual obligations for S-band.”

The minister said policies on the allocation of spectrum have undergone a change in the last few years and that there has been increased demand for spectrum for national needs, including defence, paramilitary forces, railways, public utility services and for societal needs.

In 2005, Antrix signed a contract with Devas Multimedia to build two satellites on which Devas would lease transponders in India. Bundled into the deal was 70 MHz of S-band spectrum.

After news reports about a notional revenue loss on the Antrix-Devas contract, the government and Isro said the project was under review and action had been initiated to terminate the contract.

In December 2009, Isro ordered a review of the deal and, subsequently, the Space Commission recommended its annulment on July 2, 2010.

The development has caused further embarrassment to the government, as Isro reports directly to the Prime Minister's Office. Prime Minister Manmohan Singh had appointed a two-member committee to review the Antrix-Devas deal.

At an interaction with mediapersons, the PM said yesterday that the deal had never been operationalised and rejected suggestions that his office had held “backroom” talks with Devas after the Space Commission's decision to scrap the deal.

He said that if there was any delay in scrapping the deal, this has been “only procedural”.

According to government officials, there are clauses in the contract under which the government can annul the agreement. However, the clauses specify that Antrix has to pay Devas Rs 58 crore should the deal be scrapped. This is the amount Devas has so far paid as upfront capacity reservation fee for the two satellites.