Basic Services Licences May Be Reviewed

The CPM and BJP have already made it clear that they will bring up the issue before the House. A section of the United Front government, it is feared, might even press for an enquiry if not for a `put-on-hold decision.

However, a review of the cellular licences seem unlikely as several companies have already placed orders for equipment and plan to offer services soon. Also, the licensing process in cellular services was relatively non-controversial, except perhaps in the award of seven circles to Reliance, where all considerations of monopolistic operations were glossed over.

In basic services, the story is likely to be different, says a company official. The government is likely to put on hold the licensing process in the basic services, he added.

 

The communications ministers reported decision to revamp the tender evaluation committee (TEC) and review decisions were the first step in this direction. There are also other reasons that might force the government to make a review. One, the government will be hard-pressed to take some token action in face of Opposition flak and, two, the bid evaluation norms of the department of telecommunications (DoT) were not uniform and totally transparent. In fact, a case filed by Tata Communications challenging DoTs decision to award the Maharashtra circle to Hughes Ispat is pending with the Supreme Court. The charge that DoT used different norms in the three successive rounds of bidding for basic services is likely to be taken up by political parties to raise objections to the process.

While the tender evaluation committee discounted 7.5 per cent of the projected revenue stream to arrive at the net present value (NPV) of reserve price, it used the 35Y method (which works out to a higher value) to calculate the reserve price NPV in the second round. It reverted to the `7.5 per cent of projected revenue method again in the third round.

Companies critical of this switching between norms allege that the tender specified the 35Y method, but the tender evaluation committee used the 7.5 per cent of projected revenues method to suit Hughes Ispat and Telelink Networks, which were awarded letters of intent for Karnataka and Rajasthan respectively. Their bids would have been rejected if the 35Y method was used.

Nevertheless, the government can always cite the Supreme Court judgement clearing the tendering process early this year to refrain from making a review.

The court, according to the department of telecommunications critics, had only cleared the principle of tendering adopted and not the process and methodologies.