PMO intervenes in telecom cartel game

The story centres around a Rs 1,009 crore order that the DTS was awarding. In May, when Fujitsu dropped out of the 7 bidders, the ministry decided it would award the bid only to four parties in order to prevent cartelisation of suppliers. As per the normal formula, the lowest bidder would get the lion’s share of the tender, and the balance would be awarded to the other 3 bidders, but at the price bid of the lowest bidder.

Since there were 6 firms that were offering four technologies — those of Siemens, Alcatel, Lucent and Ericcson — it was very possible that one of them could get left out in the final award if only 4 firms were to be selected. And since it was not certain who would be left out, it was felt any possible cartel would break up.

On May 31, however, the Telecom Commission did a volte face, and decided that the tender would be awarded to 5 players. Now it is very clear that if 5 firms are to get the tender, all four technologies will get included. So, instead of trying to prevent any possible cartelisation, the ministry was actually encouraging this.

Around the beginning of the month, however, senior bureaucrats in the DTS — secretary R.N. Goyal and the member finance — decided to revert to the 4-firm formula to prevent possible cartelisation. The file was sent to the telecom secretary Shyamal Ghosh who was unable to clear it for several days.

Since the tender was to be opened last Friday, and Ghosh had still not cleared the file, it was decided that the tender would be extended to allow the critical changes to be made. For if any changes were made in the awarding pattern after the tender was opened, the firms could have gone to court to challenge it.

It is expected that the decision to award the contract to 4 bidders instead of 5 will be ratified early next week.

Little success in jelly
The Department of Telecom (DoT), however, is likely to land up paying a higher bill for its jelly-filled cables as compared to MTNL. MTNL was able to get a price 4 percent less than what DoT got, and that too when its order was just for 12 lakh cable kilometres as against DoT’s 400 lakh cable kilometres. The DoT, however, has decided not to ask suppliers to match the rates they offered to MTNL. Advance Purchase Orders were issued by the DoT three days ago.