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Government scraps Devas deal

Government scraps Devas deal
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First Published: Thu, Feb 17 2011. 10 49 PM IST
Updated: Thu, Feb 17 2011. 10 49 PM IST
New Delhi: The cabinet committee on security (CCS) formally scrapped the Rs1,000 crore deal between Antrix Corp. Ltd, the commercial arm of state-run Indian Space Research Organisation (Isro), and Bangalore-based Devas Multimedia Pvt. Ltd to offer multimedia services via two proposed government-funded satellites.
While Devas had declared earlier that it may consider legal action if the government “unilaterally” annulled the agreement, it said in an email on Thursday that it hadn’t received any formal communication on the termination of the pact and, therefore, couldn’t immediately comment on its next course of action.
“We have gone to the root of the matter,” said law minister M. Veerappa Moily, who announced the CCS decision at a press briefing on Thursday in New Delhi. The contract between the government and Devas “shall be annulled forthwith”, he said.
Moily added that the government was ready to defend itself legally if Devas went to court.
“We have come to the conclusion that under the provisions of the agreement and the law governing that, it can be annulled,” he said. “Even if they go to court, they are not likely to succeed.”
The 2005 agreement between the companies sparked off a controversy after The Hindu Business Line reported on 7 February that the Comptroller and Auditor General of India (CAG) had questioned the manner in which Isro-Antrix rented out transponders to Devas. Isro didn’t auction the S-band spectrum that would have come with the transponders.
The spectrum was undervalued when compared with prices at which third-generation mobile licences were auctioned last year, according to CAG.
In an interview to Mint, Ramachandran Viswanathan, president and chief executive officer of Devas, said last week that it was not spectrum that was leased out, but capacity on satellite transponders. Devas was promised the resources as per the Satcom policy, based on which all direct-to-home operators, among others, receive?satellite capacity, he said.
The Satcom policy governs satellite communications in the country and is considered part of the New Telecom Policy 1999 (NTP 1999) of the department of telecommunications (DoT). NTP 1999 is the framework that governs all policy decisions on India’s communications sector and is in line with recommendations of the Telecom Regulatory Authority of India (Trai).
Isro’s argument for scrapping the contract was that the S-band spectrum, which occupies 2.5-4 gigahertz of airspace, was of “strategic” importance.
Prime Minister Manmohan Singh said on Wednesday, in a televised interaction with editors of television news channels, that the deal had never been operationalized. He rejected suggestions that his office held “back-room” talks with Devas after the Space Commission’s recommendation to scrap the deal and added that any delay in doing so had been “only procedural”.
Meanwhile, two senior DoT officials said on condition of anonymity that DoT and Trai had been kept out of discussions over the deal despite being key stakeholders.
“The wireless planning and coordination wing of DoT is considered to be the ultimate authority on any and all spectrum-related matters,” one of them said. “We made several attempts to discuss the issue due to coordination requirements in the country. There is a high demand for spectrum in the country.”
The second official said that DoT’s attempts to discuss the issue with the department of space were rebuffed.
“We were either told to go to the cabinet or that it was a national security matter and, therefore, (we) have no say in the issue,” he said.
jacob.k@livemint.com
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First Published: Thu, Feb 17 2011. 10 49 PM IST
More Topics: Isro | Antrix | Devas Multimedia | CCS | Manmohan Singh |