Isro may have to pay big penalty

Cabinet set to scrap S-band contract

A decision is expected at next week’s Cabinet meeting, sources said, adding that a range of security concerns compelled the Indian Space Research Organisation (Isro) to review the deal to allocate S-band spectrum in two upcoming satellites – GSAT 6 and GSAT 6A to the private company.

While the space agency may have a reason to give security a priority following 26/11 and rise in Naxal incidents, sources said the loss to the exchequer would come now as ISRO would have to pay a heavy amount to annul the contract.

The contract has many penalty clauses including $20 million as “upfront capacity reservation fee,” $9 million on annual lease fee (which Devas would have to pay to Isro had it hired the transponders on-board the satellite) and delayed delivery penalty of $5 million. Devas was to use the GSAT transponders for 12 years.

But how much Isro would actually have to be pay would depend on the legal stand Devas Multimedia takes after analysing the controversy and the actual progress made in the GSAT 6 project, sources said.

The penalty may include the possible revenue loss, which Devas anticipated from the satellite-based services it planned to launch using the high-power spot-beam in the S-band such as satellite-based internet access. The taxes and service charges Devas has paid so far may be added too.

“Termination is a very complex process which we are undergoing now,” Isro chief K Radhakrishnan had said on Tuesday.

An Isro official told Deccan Herald  the space agency began reviewing the deal following a security need to watch out for mobile communications in disturbed areas and monitor movements of trucks and trains in real time. 

Even though Isro officials are not providing any details on the review and why the need arose, its timing coincides with Naxal activities across some states. An official said along with the security issue, the same S-band could have civilian usage like increasing the use of hand-held satellite mobile phones in natural calamities and tele-education.