Preliminary estimates point to loss of more than Rs. 2,00,000 crore; Department of Space, ISRO under scanner
Hard on the heels of its explosive investigations of the 2G spectrum allotments made in 2008 by the Department of Telecommunications, the Comptroller and Auditor General (CAG) has started inquiries into a 2005 agreement between the Indian Space Research Organisation's commercial arm Antrix Corporation Ltd. and Devas Multimedia Private Ltd.
The agreement relates to ISRO's launching of two satellites for Devas but automatically bestows on the latter a large hidden benefit: unbridled use of 70 MHz of the scarce S-band spectrum over a 20-year period.
ISRO is under the Department of Space (DoS), which is directly in the Prime Minister's charge.
Business Line learns that according to preliminary CAG estimates, this spectrum largesse to a private customer could have caused the exchequer a loss in excess of Rs. 2 lakh crore. According to the contract with Devas, Antrix would have earned $11 million a year per satellite for 12 years.
By comparison, the presumptive loss incurred in the allocation of 2G spectrum by the DoT, as estimated by the CAG, is Rs 1.76 lakh crore.
Under the deal, Devas Multimedia is to get access to 70 Mhz of broadband spectrum in the 2500 Mhz band. This was once used by Doordarshan to deliver programmes by satellite to all parts of the country but is now considered to be of enormous commercial value for high-speed, terrestrial mobile communications. In 2010, the Union government got nearly Rs. 67,719 crore from the auction of just 15 Mhz of similar airwaves for 3G mobile services.
Devas Multimedia is a company in which Deutsche Telekom is a minority equity stakeholder. Dr. M.G. Chandrasekhar, Devas Multimedia Chairman, is a former Scientific Secretary at ISRO.
Although the Space Commission in July 2010 strongly objected to the contract and recommended that it be scrapped, this has not happened. However, Devas Multimedia has been given some spectrum to conduct trials.
According to the contract, copies of which are available with Business Line and The Hindu, Devas Multimedia is entitled to get a total of 70 Mhz of the S-band spectrum on lease for 20 years. The contract requires ISRO to build and launch two communications satellites — GSAT-6 and GSAT-6A — at a further cost of Rs 2,000 crore. Devas Multimedia will get to use 10 transponders on each of the satellites.
The CAG is reported to have asked for an explanation from the DoS on the preferential allocation of S-band spectrum without DoS/Antrix going through a competitive bidding process; on diverting public resources out of ISRO's budget towards two customer-specific satellites for Devas Multimedia; and misinforming regulators about the project's financial aspects and its full commercial implications.
The contract, unlike others ISRO has signed in the past, places no restrictions on Devas Multimedia for onward lease of spectrum.
On May 31, 2010, Business Line first reported the preferential maiden allotment of S-band spectrum to Devas Multimedia, which planned to launch digital satellite multimedia broadcast services (D-SMB) in India using that space infrastructure.
It is the first time the S-band, which ranges from 2500 to 2690 Mhz, has been opened up to the private sector. And this has been done on the quiet.
CAG’s concerns over deal
● S-band spectrum was allocated without inviting competitive bids
● Organisational control systems were not followed
● The Prime Minister’s Office, the Cabinet, and the Space Commission have not been properly informed about the contract details, including the underestimation of ISRO’s costs
● Public resources were diverted to build two customer-specific satellites
● Devas Multimedia’s terms deviate from those in past commercial contracts of ISRO/Antrix