Rajasthan telecom circle cleared

NEW DELHI, Jan 3: In a surprise move, the Cabinet earlier this week cleared the controversial Rajasthan circle for basic telephone services ...

NEW DELHI, Jan 3: In a surprise move, the Cabinet earlier this week cleared the controversial Rajasthan circle for basic telephone services awarding it to the Telelink consortium led by Delhi-based Shyam Telecom. What is even more surprising is that the decision, it is reliably learnt, was taken in the absence of the Communications Minister Beni Prasad Verma who was away in his home state Uttar Pradesh. Sources close to the communications minister say that the minister is unlikely to sign the Letter of Intent (LoI) before the elections as this is likely to escalate political controversy.

In fact, these sources say that minister had his reservations about deciding the Rajasthan circle, which has been hanging fire for nearly three years, especially at a time when the elections have already been announced.

Highly placed sources say that as has been the case in several telecom issues of late, there was pressure from the Finance ministry and the PMO to clear the Rajasthan circle. The issue had been discussed by the Cabinet nearly five months ago which had referred the matter to the Committee of Secretaries. The issue was subsequently sent to the Telecom Regulatory Authority of India (TRAI) following which the Cabinet secretariat had asked the Department of Telecommunications (DoT) to forward a formal note on the issue.

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The Rajasthan circle had been jinxed from the beginning. The consortium had bid for the licence quoting a fee of Rs 1,100 crore which was short of the reserve price of Rs 1,700 crore over a period of 15 years fixed by the DoT.

However the Tender Evaluation Committee within the DoT later decided to treat the bid favourably as it was felt that if the circle was bid again the bid was not likely to attract even the figure of Rs 1,100 crore.

In the second round, objections were raised about the Telelink bid as the payment schedule offered by the company in its bid pledged to pay less than its required instalment in the first year even though the company agreed to pay the full amount of the Net Present Value (NPV) of Rs 449.79 crore pledged in its bid.

Later the consortium offered to correct this error and agreed to pay equal instalments of the licence fees in the first five years. This, however, was objected to by the DoT’s own legal cell as it amounted to "post-bid negotiations" according to them. The matter was then referred to the Law Ministry.

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By the time the Law ministry gave its nod to the circle, one if the members of the Telelink consortium – Advanced Radio Masts (ARM) was alleged to have links with former Communications Minister Sukh Ram in the much talked about Telecom scam. As a result the DoT again chickened out of taking a decision on the circle. Even after this the DoT was undecided whether to ask ARM to be dropped from the Telelink consortium, which the Law ministry advised would be out of DoT’s purview. However, later ARM itself opted out of the consortium paving the way for the DoT to refer the matter to the Cabinet in July last year.