The ministry is also not keen on granting a five-year extension on the licence period to cellular operators, but has stated that in case such a concession is granted, it should be done on the basis of the net present value of the quoted levy and the payment schedule. The ministry, sources said, is not willing to defer payments beyond December 31, 1998. It has stipulated that licencees must furnish bank guarantees covering all dues recoverable or submit any other instrument which is legally acceptable to the government.

Sources said that top functionaries of Cellular Operators Association of India (Coai) met senior ministry officials over the past few days to convince the ministry on the need to grant a two-year moratorium and extend licenceperiod. However, the ministry was seemingly not impressed by their arguments.

A note prepared by the department of telecom for approval of the union council of ministers also states that representations have been received against the reliefs sought by cellular operators.

The arguments put forth in the representations are that since some of the operators are big names in industry and are implementing various other projects with investments of thousands of crores, the government should not accept inability to pay the licence fee as sufficient excuse for non-payments.

It is also pointed out that the nowhere did the tender conditions state that liability to pay licence fee will arise only if the companies generate enough resources to pay the licence fees. If there had been such a condition in the tender document, many more companies would have come forward to set up cellular networks.

Another argument is that with the pressure of containing fiscal deficit mounting on the finance ministry, a sector such ascellular telephony which primarily caters to well-to-do section of the society does not deserve any concessions when a large number of projects and schemes for poor sections are suffering for want of funds.

Representations have also been made against the entire issue being referred to Trai as it may be looked upon as an attempt to allevate the Trai to the status of BIFR and it will get ipso-facto authority to give directions to the government to postpone or waive licence fee. This may not be ethically, morally and legally correct, the note says while referring to the representations.

The DoT note also mentions that the Comptroller and Auditor General (CAG) had stated in its report that DoT gave undue benefit to the cellular operators in the metro cities by not linking the licence fee with the subscriber base in the initial years and not revising the licence fee subsequent to the upward revision in the DoT call rate from Rs 1.10 to Rs 1.40.

Insight

Giants clash on moratorium

The demandfor a moratorium on licence fee for 1997 and 1998 is turning out to be controversial. DoT is willing to go along with the proposal before Trai, but the finance ministry has demurred, inter alia, because the licence fee was not linked to resources of operators. Had such a linkage been allowed, there would have been more bids for the circles.

A crucial point in the controversy is that corporates like Reliance and Escorts have paid their licence fee. They will be disadvantaged if a moratorium is given to cell operations, of, say, Essar or Usha India group. It seems only cell operators with deep pockets can survive--others will have to sell out like Max did to to Hutchison.