North-East telecom projects: Is BSNL being denied chance to bid?

Is BSNL being ignored in the award of government projects such as providing mobile connectivity to the North-East?

According to multiple sources in the government and BSNL, the Department of Telecom has been favouring private players indirectly even though initial indications were to award the contracts to BSNL. They point to a DoT internal note of September 8, in which the Telecom Commission (TC) has recommended awarding works in Assam and Sikkim to Bharti Airtel, and Mizoram, Nagaland, Tripura, Manipur and Arunachal Pradesh (National Highways) to Bharti Hexacom.

Meghalaya project

This was done as the BSNL’s tender rate for Meghalaya, covering 2,173 towers in 2,374 villages, at ₹2,351 crore, was 70 per cent higher than the ₹1,374 crore estimate. The TC recommended that the tender under the USOF (Universal Service Obligation Fund) scheme in Meghalaya be cancelled and the project re-tendered. The USOF is for provision of mobile services in uncovered villages and along national highways.

Sources close to the development told

BusinessLine that at a meeting to review the progress of infrastructure projects in October, the Principal Secretary to the Prime Minister had expressed ‘displeasure’ on the delay in the finalisation of the Meghalaya tender. The official said that the PMO wanted to look at the proposal to award the Meghalaya contract to BSNL, but disregarding this, the DoT is looking to award it to a private player.

Noting that the process of bidding would further delay the project, the Principal Secretary had said that proposal for awarding the project to BSNL on a cost-plus basis should be examined.

Another curious point in the entire North East mobile tower project is that while BSNL managed to get the contracts for Assam and Arunachal Pradesh, for the other North-East States, the USOF decided to give them to private operators. Here, too, just one contractor bid for the Meghalaya contract, only to withdraw without assigning any reason. After this failed bid, the USOF decided to call private operators with an enhanced price, denying BSNL a chance to bid for the project.

“It is ironical that public money is being given to private operators to build infrastructure by ignoring government-run BSNL. Moreover, the Meghalaya project cost has been doubled to ₹4,300 crore without conducting any financial viability study and without taking the Cabinet’s approval. The total cost of setting up 2,173 mobile towers on 2G+4G technology in Meghalaya, as per DoT recommendations, is estimated at ₹4,302 crore, which is much higher than the initial estimate of ₹1,374crore.

“Also, it is not clear why the other North-East States have been denied the 2G+4G technology, as being planned for Meghalaya,” one official said.

Another official said that the project would help BSNL earn revenues and dovetail well with the government’s move to revive the PSU.

Making BSNL competitive

Telecom Minister Manoj Sinha last Friday told the Rajya Sabha that the Telecom Commission is looking at how to make BSNL competitive. The Lok Sabha Standing Committee on Finance on Wednesday said that “the USOF should be fully deployed, particularly with public sector telecom companies for extending mobile and Internet penetration and delivering digital services to the hitherto unserviced areas.” TRAI should also act as a facilitator to achieve these objectives through their regulatory powers, it added.

The project, if awarded to BSNL, would also help domestic equipment manufacturers as there is a preferential market access policy to procure India-made products.