The clouds over the timing of 3G spectrum auction would now be removed by finance minister Pranab Mukherjee himself. Other members of the empowered group of ministers (eGoM) have authorised Mukherjee to take the final decision after having heard all the views. Mukherjee, who?s also the chairman of the eGoM, would discuss the matter soon with the Prime Minister.
?The eGoM has vested all powers in Pranab Mukherjee and left it to him to take a decision on when to hold the auctions and for how many slots. He?s slated to meet the PM shortly to discuss the issues and set the final timeline,? sources involved in the process told FE.
The question that is holding up the decision is whether the auctions for all the four slots should be done simultaneously and spectrum be allocated in September, or auctions for two slots, for which spectrum is readily available, should be done within this financial year itself. The law ministry has cautioned against the second option.
Sources said in case FM decides to go ahead with the auctions this year, there could be auctions for two slots across the country by March 31. Since BSNL/MTNL have already been given spectrum and started operations, there would be three operators pan-India for 3G services.
If this option is exercised, a second round of auction would have to be held when the balance spectrum gets vacated by the defence forces in September.
Ideally, the government wanted to hold auctions for four slots in all the 22 circles of the country, apart from the one slot given to BSNL/MTNL.
The law ministry?s latest advice to hold the auctions only when the spectrum is fully available with the government to avoid any legal claptrap, has also been sent to the finance minister.
Sources said the department of telecommunications has prepared a revised schedule for it to be ready in case it is decided to hold the auctions within March 31.
As per this schedule, the auction would commence on February 22. In the revised schedule, the DoT has compressed the time schedule for full payment by the successful bidders to 10 days after the completion of the auctions against 20 days decided earlier.
As reported by FE, the law ministry has opined that since spectrum would be given to the operators in September, there could be legal problems if there were any slippages in this deadline after taking the payment.
The DoT has suggested that in case the government fails to allocate spectrum by December 31, the successful bidder be refunded the entire amount deposited by him with compounded interest.
This could be a huge burden on the government since the reserve price for a pan-India bid is itself Rs 3,500 crore.
The law ministry fears that the operators might ask for refunds of even the investments in infrastructure and equipment.
The auctions are critical for the government as it has budgeted Rs 35,000 crore from them to bridge a high fiscal deficit of 6.8%.
To help operators raise funds the finance ministry has recently eased the fund raising norms for them by allowing them to refinance their domestic debt by external commercial borrowings later.