NEW DELHI, May 22: The Department of Telecommunications (DoT) has proposed major financial concessions, including a reduction in the amount of bank guarantee (FBG) and a waiver of penal interest, to basic operators though it rejected a number of technical issues. Operators were asking for reducing the financial bank guarantee to the level of licence-fee liability of succeeding year. DoT, in its response, said: "In cases, where the amount of the financial bank guarantee is much more than the amount of annual licence fee for the first year, FBG could be reduced to the level of licence fee plus some reasonable amount to cover access charges, lease rental etc".

The DoT stand on basic service operators' demands are contained in a memorandum, which would be placed before the Telecom Commission for approval.

Two companies, Techno Telecom and Bharati Telenet, had moved the department, seeking a concession in FBG. DoT, however, said the prescribed FBG amount, in most cases, did not cover even the licence fee for a particular year.

A waiver of penal interest with effect from the expiry of cut-off date of October 18, 1996, for concluding agreements till the signing date was another major demand of the operators. Bharti Telenet and Reliance Telecom Limited were the only operators to sign the agreement.

DoT has proposed to fix May 31, 1997, as deemed date for applying the penality clause. It has said this would imply the shifting of effective date of licence of operators, who have already signed the agreement.

Consequently, the payment of second year's licence fee by the operators would become due only after one year from the deemed date. While a final view on the deemed date is yet to be taken, May 31 has been fixed as the latest cut-off date. The DoT has, however, turned down the request made by Essar Commvision for reducing the amount of performance guarantee to Rs 25 crore plus a security bond of equal amount.

The DoT note said the Essar Commvision had commited to commission 1,25,000 DELs during the first year, and accordingly the PBG of Rs 50 crore was due from them.

"Considering the initial financial difficulty of launching the project and in line with the decision in the case of Bharti Telenet, this company (Essar Commvision) may be asked to furnish PBG of Rs 26 crore plus a security bond.''

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.