BSNL's GSM order may be at risk

State-owned Bharat Sanchar Nigam Ltd's (BSNL's) $6-billion order for GSM equipment may get entangled in another controversy with the telecom ministry mulling its recall.

A section of officials in the ministry feel the contract, at $109 per line, was awarded at a "high price."

They said existing global rates were around $90 per line for this kind of a tender. At $107 per line, the telecom behemoth will end up paying an additional Rs 1,800 crore for the GSM lines.

Also, the 3G component of the contract is "premature" as the government has still not provided any spectrum or finalised a policy for the rollout of 3G services, they say.

A source close to the development said the ministry was re-looking at the tender, that was close to being awarded to Swedish telecom infrastructure major Ericsson. Apart from renegotiation of prices, a suggestion for calling for another tender has also been made.

When contacted, a BSNL official said, "We haven't heard of anything and can't comment". Spokespersons for Ericsson and the Department of Telecommunications (DoT) also declined comment.

BSNL had floated a global tender in 2005 for 60 million lines, out of which 50 per cent (30 million) were reserved for 2G and the rest for 3G services.

Ericsson had emerged as the lowest bidder, while US telecom major Motorola and Chinese telecom giant ZTE were disqualified by the BSNL's technical evaluation committee.

Motorola moved the Delhi High Court against the disqualification, igniting a controversy. The petition was later withdrawn.