The dust refuses to settle on the controversy over Bharat Sanchar Nigam Limited’s (BSNL) mega 93 million GSM line tender. The PSU’s decision to disqualify Nokia Siemens Networks (NSN) on technical grounds has the equipment major up in arms.
For BSNL, meanwhile, it is becoming increasingly urgent to move ahead with its expansion plans. Faced with a severe crunch in network capacity in certain areas, BSNL is now set to grant a new order to Ericsson for the supply of telecom equipment for 5.25 million GSM lines worth $500 million.
BSNL’s procurement policy allows it to purchase up to 50 per cent of its requirement from existing vendors. The new order to Ericsson will be an extension of the earlier contract signed with the company in 2007. However, it means that Ericsson will have to supply BSNL equipment at the mutually agreed upon 2007 price of Rs 5,000 a line, as against the current Rs 7,000 a line.
The decision to accept BSNL’s contract now lies entirely with Ericsson, which is one of the two shortlisted vendors for the 93 million line project worth about Rs 300 billion. Reportedly, Ericsson is prepared to supply additional capacity only if certain infrastructure items such as towers, generators, shelters, ACs and stabilisers are procured elsewhere. However, if BSNL agrees to Ericsson’s condition, it could impact BSNL’s finances as it would have to hire the items from infrastructure providers or procure them directly, leading to an increase in the cost of the GSM lines.
BSNL’s GSM rollout has been severely hit after its two last tenders ran into rough weather. While the initial one delayed BSNL’s plans by at least a year after Motorola took BSNL to court, the 93 million line contract has also hit multiple roadblocks. While BSNL shortlisted Ericsson and Huawei for the contract, it disqualified NSN, Alcatel-Lucent and ZTE on technical grounds. Subsequently, NSN challenged BSNL’s decision.
The Central Vigilance Commission formed an independent panel to investigate allegations of impropriety in the tendering process. The panel recently gave BSNL a clean chit. But NSN was not appeased. It questioned the credibility of the findings and noted that the process adopted by the panel did not give the company a fair opportunity. According to NSN, the technical evaluation committee had taken a more favourable view towards one of the other bidders even though that company had not submitted the documents that were required to qualify.
NSN filed an appeal in the high courts of Punjab and Haryana, and Andhra Pradesh. While the Punjab and Haryana High Court dismissed the case, allowing NSN to file a fresh appeal, the Andhra Pradesh High Court has put a stay on the contract for the south zone.
As of now, it is unclear whether or not NSN will pursue the BSNL case further. Meanwhile, ironically, ITI Limited and NSN have both emerged as the winners for BSNL’s gigabit passive optical network contract after a two-stage bidding process.
For BSNL to move ahead on its projected growth path, it is important that the cloud of controversy over its technical selection lifts at the earliest.
