DoT ignored PM, ministries' advice

DoT ignored PM, ministries' advice

In a serious indictment of Raja, the Comptroller and Auditor General (CAG) report said despite the prime minister’s advice to discover the pricing of spectrum through a fair and transparent method of auction,  and revise the entry fee which was benchmarked on an old price, the spectrum was allotted to new operators in 2008 at the prices set in 2001.

Similarly, TRAI recommended “no cap”on the number of licences in any service area but the DoT said applications for issue of licences would be accepted only up to January 10, 2007. “This action, in effect, conveyed fixation of an artificial cap on the number of licences to be awarded. The ministry circumvented the recommendations of TRAI by taking an action counter to the recommendation. The CAG said the policy of first-come-first-serve basis was not followed in letter and spirit. The government auditor said 85 out of the 122 licences issued in 2008 were found to be issued to “ineligible companies.”

“Many of these companies suppressed facts, disclosed incomplete information and submitted false and fictitious documents for getting licences and thereby to spectrum,” the CAG said in its report.

3G spectrum auction was recommended by TRAI in its report to government in September 2006. TRAI said it was fair to compare 2G spectrum with 3G and recommended 3G prices to be adopted as current price of 2G spectrum in 1800 Mhz band.

“If these recocmmendations which have not so far been accepted by the government are taken into account, then the value of 2G spectrum allotted to the 122 new licensees and 35 Dual Technology licenses would be much higher at about Rs 1,52,038 crore as against the amount received”, the CAG said.

Among the industrial houses that benefited from Raja’s 2G spectrum policy were the Anil Ambani group, Unitech, Datacom (now Videocon), S-Tel, Swan and Loop Telecom, who were given licences in January 2008.

CAG said that the entire process of allocation of Unified Access Service licences “lacked transparency” and was undertaken in an “arbitrary, unfair and inequitable manner”, in the process “flouting every canon of financial propriety, rules and procedures.”

On the issue of spectrum allocation to existing operators beyond the contracted quantity of 6.2 Mhz, the CAG has found Sunil Mittal-led Bharti to be the biggest beneficiary, among private players, with 32.4 Mhz in 13 circles, followed by Vodafone- Essar with 19.6 Mhz.
The auditor has pegged revenue loss on account of new licences at up to
Rs 1.40 lakh crore and that on account of additional spectrum allotment to the existing operators at Rs 36,993 crore.

The 77-page report report said the “presumptive” loss caused to the exchequer through spectrum allocation to 122 licensees and 35 dual technology licences in 2007-08 was Rs 1,76,645 crore. It arrived at the figure on the basis of 3G auction held earlier this year in which the government mopped up over Rs  67,000 crore.

It said there was an “imperative need to fix responsibility and enforce accountability for the lapses highlighted in the audit report.”

Elaborating on the lapses and irregularities, the government auditor said Prime Minister Manmohan Singh had “stressed on the need for a fair and transparent allocation of spectrum” while the Ministry of Finance had sought for the decision regarding spectrum pricing to be considered by an EGoM (Empowered Group of Ministers).

“Brushing aside their concerns and advices, the Department of Telecommunications, in 2008, proceeded to issue 122 new licences for 2G spectrum at 2001 prices, by flouting every canon of financial propriety, rules and procedures,” the CAG said.

The DoT also did not do the requisite due diligence in the examination of the applications submitted for the licences, leading to the grant of 85 out of 122 licences to the “ineligible applicants” as all these firms did not have stipulated paid-up capital at the time of application.

Further, 45 out of 85 licensees were issued to companies which failed to satisfy conditions of the main object clause in the memorandum of Association (MoA), it said.
The CAG said the process of giving dual technology licences to leading telecom firms including Reliance Communications and Tata Teleservices “lacked transparency and fairness”, and equal opportunity was denied to other similarly placed operators who could apply for use of dual technology only after formal announcement of the policy.

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