The Space Commission has recommended to the Cabinet Committee on Security (CCS) that the controversial S-Band spectrum deal between ISRO's commercial arm Antrix and private firm Devas Multimedia be immediately annulled.
The Space Commission made this recommendation in a note to the CCS, saying priority is required to be given to the country's strategic requirements including societal ones. The CCS is chaired by Prime Minister Manmohan Singh.
The Department of Space may take necessary steps and give instructions for scrapping the Antrix-Devas Agreement, according to the Commission's draft note. According to sources in the know, K Radhakrishnan, Secretary, Department of Space, wrote a letter to D R Meena, secretary, Ministry of Law and Justice in this regard.
The annulment comes in the wake of a raging controversy over the deal for handing over 70 Mhz of S-Band spectrum to the private firm for Rs 1,000 crore on which the CAG has already initiated action. According to news reports, this deal could have resulted in a loss of Rs two lakh crore to the exchequer.
Following these reports, the Government and ISRO said that the project was already under review and action has been initiated for termination of the contract. "In consulation with the Ministry of Law and Justice and the Additional Solicitor General, it was proposed to place the matter before the CCS for a decision," the letter by Radhakrishnan said.
The Draft Note for the CCS, which is likely to be placed at its next meeting, has been approved by the Prime Minister who is understood to have directed that the view of the ministries concerned may be obtained.
According to the Draft Note, the agreement for the lease of Space Segment Capacity on ISRO/Antrix S-Band Spacecraft by Devas Multimedia that was entered on January 28, 2005 needs to be annulled in view of priority needed to be given to the nation's strategic requirements including societal ones.
The Agreement calls for payments by Devas to Antrix of an up-front capacity reservation fee of $40 million for two Satellites and lease charges of $18 million per year during the operational life of the Satellites, which will be enhanced by 25 per cent, when Devas becomes cash flow positive.
"As of now Devas has paid to Antrix, a total amount of Rs 58.38 crore in as the first instalment of the Upfront capacity reservation fee for PS-1 (during June 2006) and PS-2 Satellites (during June 2007)," the draft note said. The space segment capacity to be leased to Devas as per the Antrix-Devas agreement would take away 80 Mhz of S-Band spectrum available with ISRO, for the life of 12 years of each satellites.
"...Such a dispensation might not ensure a level-playing field for the other service providers using terrestrial spectrum, especially considering the significant demand for this S-Band spectrum and the current trends on the prices," the note said. As per the auction of 3G spectrum held last year, 5 Mhz of spectrum cost over Rs 16,800 crore for pan-India licence.
According to the draft note, the ministries of Law and Justice and Telecommunications had stated in their views that the deal between Antrix and Devas may be annulled to preserve the precious S-Band spectrum for strategic requirements of the nation and to ensure level-playing field for other service providers.
The Ministry of Law and Justice, had said in its letter on June 18, 2010, "...the Central government (Department of Space) in exercise of its sovereign power and function, if so desire and feel appropriate, may take a policy decision to the effect that due to the needs of strategic requirements, the Central government/ISRO would not be able to provide orbital slot in S-Band for operating PS-1 to the Antrix for commercial activities."
In that even, Antrix may terminate the Agreement and inform Devas accordingly, it said adding on such termination "Antrix shall be required to reimburse Devas all the Upfront Capacity Reservations Fees and corresponding service taxes received by Antrix till date..." Similarly, the Department of Telecom (DoT) in two separate letters of July 6, 2007 and again on July 28, 2010 had objected to such deal and was against lease of spectrum. "The spectrum planned by Department of Space for strategic use is not to be shared with commercial applications as in the case of Devas multimedia...." the DoT had said in its first letter.
In its second letter of July 28, 2010, the DoT reiterated that terrestrial component of such frequencies should also be given "similar treatment as in the case of 3G and BWA (Broadband Wireless Access) spectrum with regard to pricing and auction mechanism and auction should be adopted for fair spectrum allocations..." The opinions of the two ministries were endorsed by the Additional Solicitor General of India who said in its letter dated July 12, 2010 that the agreement was entered between Antrix and Devas, way back in the year 2005, the circumstance was vastly different that what it is today.
While endorsing the opinion of two ministries to cancel the contract, the Additional SG said that "it will be advisable from a legal perspective that that direct (for cancelling the contract) comes from the Department of Space on the basis of a governmental policy decision" and not from Antrix. Keeping all these in mind, the DoS has moved a note for consideration of CCS for annulment of the Antrix-Devas deal, the draft note said.