BSNL to scrap Rs35,000 crore tender; seek fresh bids

The board of state-run telecommunications company Bharat Sanchar Nigam Ltd yeterday decided to scrap its controversial tender for 93 million GSM lines, worth over Rs35,000 crore, and invite fresh bids, after the Central Vigilance Commission (CVC) found irregularities in the original tender.

The troubled BSNL, which is rapidly losing market share partly because of limited capacity, was banking on what would be the world's largest telecom equipment contract. The company ran out of cellular capacity in most circles nearly 18 months ago, it is reported.

The short-listed firms were Sweden's Ericsson, Chinese network-gear maker Huawei and HCL infosystems, which has already bagged the HT (high tension) component of the deal.

But the CVC said that the disqualification of bidders Nokia Siemens, ZTE and Alcatel Lucent resulted in the remaining vendors, Ericsson and Huawei, being assured of the deal, and BSNL could therefore not get the best price as there was no competition for the contract. Besides, the CVC report highlighted that the prices quoted by Huawei were significantly lower than those offered by Ericsson.

Now a committee led by Sam Pitroda, advisor to the prime minister on public information, infrastructure and innovation, and including HDFC chairman Deepak Parekh and telecom department secretary P J Thomas as members, has endorsed the CVC request to scrap the tender.

The Pitroda committee has submitted a 15-point plan of action to turn around the ailing BSNL. The prime minister's office had asked the committee to take a final call on the tender after evaluating the CVC report.

A couple of weeks ago, BSNL chairman and managing director Kuldeep Goel had said the company was not keen on scrapping the tender, and instead may simply reduce its size. ''BSNL does not need to scrap or re-issue the GSM tender, as suggested by the CVC, as the existing tender conditions already have a clause that the company can reduce the size of the tender on its own as per requirements,'' he had said. But now it may have to go for a total re-tendering. (See: BSNL not to re-float Rs35,000 crore GSM tender)

The company has also decided that it will adopt a new methodology for procurement - a managed service model on the lines of private sector telecom operators. If there is any delay in switching over to the new model, the company would make up the existing shortfall in its current line capacity by sourcing them from its current vendors.