All resources may not go under the hammer

Written by Nistula Hebbar | Nistula Hebbar | New Delhi | Updated: Feb 14 2012, 12:08pm hrs
Telecom
The government seems set to contest some of the broader implications of the recent Supreme Court order which suggested that auctions were the best way to allocate all natural resources while striking down 122 telecom licences issued under a first-come, first-served policy. Clearly, the government wants to retain the executives discretion in making policies to allocate natural resources in public interest, sources said. The law ministry may take a formal position on this soon even at the risk of causing discomfort to the apex court.

Sources said the law ministry is of the view that the judgment was in the context of telecom licences granted in 2008 through an allegedly manipulated first-come, first-served policy and that the government was within its rights to frame policies to allocate other natural resources. As a consequence, the impact of the judgment recommending auctions for all resources could be limited to wireless spectrum. For other natural resources, the government is likely to adopt policies suitable to the sector rather than a one-size-fits-all approach like auctions.

We have to see whether auctions will serve the purpose when it comes to all national resources. How can you auction forests or water when it comes to public-private partnerships and projects in these areas These are resources which are accessed by the wider public. If auctioning rights for specific projects makes them scarce, what will poor people do Also, what is a natural resource Even that has to be defined correctly. Spectrum was a resource which was created by us, and could be monetised in particular ways. We have to see whether auction can suit all such resources. The judgment also impinges on the the policy-framing domain of the executive, said a highly-placed source in the government.

Prime Minister Manmohan Singh met law minister Salman Khurshid, finance minister Pranab Mukherjee and telecom minister Kapil Sibal over the weekend to understand the implications of the SC judgment, which recommended cancelling 122 licences granted by former telecom minister A Raja and conducting fresh spectrum auctions. The court asked the Telecom Regulatory Authority of India (Trai) to frame guidelines for auctions and observed that for allocating natural resources, auctions are the best way forward, not policies like first-come, first-served.

Meanwhile, with regard to filing a review petition on the cancellation of licences which has affected foreign investments of companies like Norways Telenor which invested R14,000 crore in Uninor in which it bought 67.25% stake the view within the government is to wait for private parties to move court. The court will, when private parties move before it, ask for the government's opinion, which is when it is possible that government may tender an opinion which may be co-terminus with that of the private parties, said a senior minister.

Meanwhile, the government is waiting for the opinion of attorney general GE Vahanvati on the matter.

The strategy seems well-considered. In fact, telecom minister Kapil Sibal had said after the judgment that companies which have been affected by the verdict may approach court for redressal of their grievances. Later, Telenor whose 22 licences will get cancelled in the next four months and Tata Teleservices which loses three CDMA licences in North-East and Jammu and Kashmir have said they will be filing review petitions before the SC.

The telecom regulator, meanwhile, has come out with a pre-consultation paper on auction of spectrum and will come out with a consultation paper by the end of the month.