Centre cancels Tamil Nadu’s Rs 2,000 crore Bharat Net tenders

Last Updated 28 June 2020, 04:03 IST

In a major embarrassment to the Tamil Nadu government, the Centre has cancelled four tenders worth Rs 2,000 crore issued by it for laying Optic Fibre Cables (OFC) to provide broadband connectivity to 12,524 villages, following allegations that “massive changes” were incorporated in the bidding documents to favour “specific companies.”

The Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry, in an order dated June 26, 2020, held that the bidding conditions are “restrictive and discriminatory” in nature. It also asked the Tamil Nadu government to scrap the tenders and re-invite the bids with “non-restrictive qualification” criteria.

The order came three days after the DPIIT held a hearing via video conferencing on June 23 based on a complaint filed by anti-corruption NGO, Arappor Iyakkam, and two firms who alleged that massive changes were incorporated in the tender documents in April this year even as the state was fighting the Covid-19 battle to “favour specific companies.”

‘Cancel tender and reissue them’

The tenders, which were originally floated in December 2019, have been at the centre of a controversy since the beginning as two IAS officers – the then Information Technology secretary Dr Santhosh Babu and Managing Director of Tamil Nadu FibreNet Corporation Limited (TANFINET) M S Shanmugam, were shunted out after they refused to “give into pressure” to effect changes in the bidding documents.

In its complaint, Jayaram Venkatesan of Arappor Iyakkam alleged that new IT Secretary Hans Raj Verma IAS and TANFINET MD D Ravichandran made massive changes on April 15, 2020 by increasing turnover and experience of the company and changing router configuration to suit “specific companies.”

“…it has been considered that the bidding conditions incorporated by TANFINET in the bidding documents are restrictive and discriminatory in nature. As such, TANFINET should scrap the tender and re-invite bids with non-restrictive qualification criteria,” Rajesh Gupta, Director, DPIIT, said in the order.

The order is an embarrassment to the state government which had rejected charges of irregularities in the tender process. IT Minister R B Udhayakumar had justified the changes in the tender documents, while dismissing charges of corruption.

‘Big Corruption averted’

The hearing on June 23 was attended by Joint Secretary of the Department of Telecommunications, IT Secretary of Tamil Nadu, and MD of TANFINET.

Venkatesan said the Tamil Nadu government officials who were present at the hearing were not able to justify the “arbitrary changes” made to the tender documents that could have benefitted a few companies.

“A big corruption has been averted in Tamil Nadu through the order by the DPIIT. Through the order which has cancelled the tenders and have directed their reissuance, Arappor Iyakkam’s contentions of irregularities and illegalities in the tenders floated by the government have been proved. It is a big victory for us. These tenders, if not cancelled, would have resulted in a massive corruption,” he told DH.

Since the tenders have been cancelled now, Venkatesan said, the Tamil Nadu government should act against the two IAS officials who effected changes in the tender documents and removal of the IT Minister from the Cabinet.

Arappor Iyakkam filed four complaints on the “massive changes” made to four BharatNet tenders to favour specific companies for all four packages. The tenders were issued in four packages – Package A with a value of Rs 350 crores, packages B and C– with a value of Rs 550 crores each, and package D worth Rs 500 crore.

Based on one of the complaints, the DPIIT had stayed the tender opening and finalization pending disposal of the grievance. The NGO has been contending that the tender conditions that were changed in April were in complete violation of the guidelines of the Central Vigilance Commission (CVC) as well as DPIIT’s 2017 Make in India order.

The NGO alleged that that the changes include increasing the turnover of the company participating in the bidding process and its experience, introduction of proof of concept to bring subjectivity and discretion in tender and changing router conditions to suit “certain specific companies.”

How the controversy came to the fore?

The DMK also lapped up the allegations levelled by Arappor Iyakkam and also moved the Madras High Court seeking a probe into the issue. DMK’s Rajya Sabha MP R S Bharathi sought registration of FIR on his complaint against Chief Minister Edappadi K Palaniswami and the Minister.

The Tamil Nadu government and the Centre entered into an MoU on December 26, 2017 for implementation of BharatNet-II in Tamil Nadu, which envisages connecting 12,524 villages in the state with a bandwidth of 1 Gbps which can be scaled up as required.

Based on the MoU, the Tamil Nadu government launched Tamil Nadu FibreNet Corporation Limited, a special purpose vehicle (SPV) on 08.06.2018, which floated the tenders.

The controversy over the project began after Dr Santhosh Babu sought voluntary retirement for his service in January this year. His move raised questions whether he is under pressure over the BharatNet project. However, the IAS officer withdrew his request and was shunted out of the department. Soon, the MD of TANFINET was also transferred.

Political parties welcome move and demand answers

As the order was made available in the public domain, Opposition Leader M K Stalin sought a detailed response from Chief Minister Edappadi K Palaniswami on the tender process. “The Minister lied to the people that there were no irregularities. What is the action that will be taken against him? Will he resign or will he be dismissed from his post? What action will be taken against the officials?” Stalin asked in a statement.

AMMK chief T T V Dhinakaran also welcomed the Centre’s decision. “This is just the beginning. The irregularities in tenders awarded to the relatives of (the chief minister) in every department will come out one by one,” he tweeted.

(Published 27 June 2020, 10:43 IST)

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