The recent fracas over the 93 million line tender of the BSNL, which has been reported in detail by this newspaper, once again brings out that all is not well in the manner in which the communications and IT minister A Raja has been running the high-profile and significant department of telecommunications.
In a way, we are seeing Raja?s relations with BSNL coming full circle. The company has been severely damaged by him in recent times, as he caused delays in the tender it floated in 2006. Ironically, in his second stint in the ministry, Raja is so keen that the tender gets awarded; he did the politically incorrect thing of writing to the Prime Minister despite a Central Vigilance Commission enquiry into the alleged irregularities in the tendering process that it be allowed to sail through. It is the same old pretext?corporate rivals are out to kill BSNL.
Earlier, the same argument was made by everyone else but Raja. After first taking charge of the ministry, he was unconvinced and sat over the company?s 45 million line tender in 2007, claiming that the price was high and needed to be lowered. The tender had been finalised by his predecessor who happened to be from his party but had fallen out with the DMK patriarch at that time.
So, one should certainly welcome Raja?s sympathy for the company, albeit some two years later. But won?t it be in the interest of transparency, by which politicians and ministers swear, to tell the nation what lies behind this change of heart? Is it a coincidence that a government nominee on the board of BSNL, who?s a joint secretary rank official, got transferred out of the DoT to BSNL a day back and it was the same official who had submitted a dissent note on the final award of the tender? Does the whole thing not demand a greater explanation?
It was the delay on Raja?s part to clear the tender on time in 2007 that cost BSNL dear. The company lost its second-largest position in the GSM space to Vodafone-Essar, and later its numero uno position in terms of fixed as well as mobile customers to Bharti Airtel. Yet, a year later the company floated a 93 million line tender, one of the largest in the world!
However, it?s very difficult to read the mind of Raja, who has taken decisions that have created more controversy than creativity in the sector. The larger point is, why do BSNL tenders always run into a mess? Part of the explanation is that being a government organisation, the company?s procurement has to be through open tender, which means that its rates and other confidential aspects get widely discussed in the public domain, which places it at a disadvantage vis-?-vis private sector competitors.
The larger problem is the company?s fixation with things mega, which leads major equipment vendors fight for its order. For instance, the 45 million line tender floated by the company in 2006 was billed as the biggest in the telecom sector worldwide and ditto for its more recent 93 million line tender. What?s the need for a company that is not the biggest globally to float the largest-ever tender? Company and DoT officials would say this is done to cut on delays and that supplies are spread over a period of time. But this is not a satisfactory explanation. A better alternative would be to go for short, quick tenders at more frequent intervals.
The other problem is with regard to the specifications in the tenders. Industry grapevine has it that the technical requirements are so stringent that right from the start it is designed to favour some pre-selected party. It surely can?t be a coincidence that in the previous tender a global vendor like Motorola got disqualified on technical grounds and this time around Nokia Siemens met with the same fate. It?s true that in both cases the parties did not get relief from the requisite legal channels but the irreparable damage to BSNL had been done.
The network of BSNL is no better or worse than that of any of its private sector competitors. So, if the above-mentioned vendors can find place in private players? architecture, what technical specifications make them fail in competing for BSNL?s order? There?s a larger issue here: while the government?s open tender policy is based on transparency, the tender document and the reasons for failure on technical grounds by a particular vendor is never made public.
One can endlessly debate the disadvantages BSNL faces vis-?-vis private sector peers in a sector where competitive elasticity is very high just because it is a PSU and has to adhere to government and parliamentary regulations. One solution proffered these days is that the company should be listed. But this would hardly solve the problem because with a 10% divestment its umbilical cord with the government would be intact, hardly giving it any autonomy. If there?s any doubt, just have a look at its sister organisation?MTNL, which is even listed on NYSE!
In a sector like telecom, the government needs to do a strategic sale?bring down its stake to 26% and hand over the company to a private player and reap dividends. There?s no other solution. Even on this, the government should act fast, or else there would be hardly any takers for this also!