The Central Vigilance Commission, which is probing the Rs 36,000-crore BSNL tender for 93 million GSM lines, has found the company would have paid at least Rs 8,000 crore or 130% more, on a per line basis, than what it had paid for the same equipment in 2007. This apparently inflated price, quoted after post-tender negotiations, was agreed upon despite a 30% fall in equipment costs in the intervening period. Again, this inflated price was just for two regions, north and east.
As earlier reported by FE, the tender has been put on hold with the CVC investigating charges of irregularities.
According to the pricing details accessed by FE, the final per line price quotation post-tender negotiations for the north and east regions came to Rs 4,600, 130% higher than the 2007-price of Rs 2,038.
Officials told FE that rather than placing orders at a higher rate, it made better sense for BSNL to place orders for additional equipment with the earlier vendor, which happened to be the same, Swedish major Ericsson.
The CVC, which has seized all tender-related documents from BSNL, is now finding out what led the company to agree to such a high price when there was a provision in the earlier tender for scaling it up.
BSNL?s internal cost estimate before opening the tender was at Rs 3,250 on a per line basis, which had 25% 3G component. However, the lowest bid came to an astronomical Rs 8,600 on a per line basis, which led BSNL to drop the 3G component. Even then the final price came down to only Rs 4,600.
BSNL had floated the 93-million line tender, the world?s biggest for telecom equipment, in April 2008 in four parts. Part-I dealt with supplying base tans receiver stations (BTS), part-II was the 3G component, part-III was infrastructure related—for supplying towers, batteries and electrical items?and part-IV was for operation and billing systems.
Ericsson had emerged the lowest bidder for the north and east. Ericsson also happened to be the only player left in the fray, with Nokia Siemens disqualified on technical grounds. Ericsson was also the L1 bidder and supplier of the tender, awarded in 2007.
The inflated price came to light when DOT joint secretary and government nominee JS Deepak presented a dissent note at the BSNL board meeting on December 21, raising serious objections.
?The decision to procure 93 million lines of equipment was taken in April 2008, assuming that BSNL?s market share would stabilise at more than 30% in mobile services. However, due to the rapidly declining market share, fall in revenues from telecom services, decline in profits in the last four years and the huge likely losses in the current and future years, it appears that BSNL?s market share in mobile services, which has today come down to less than 13% from 18% a few years back, may ultimately stabilise between 6-8% with increased competition in a total market of about 1 billion mobile phones,?.Deepak had noted.
He had pointed out that since the company was adding less than 10 million subscribers a year it did not need 93 million lines but could do with around 20 million.
On December 29, the CVC initiated a probe into the alleged irregularities, seizing all related documents.