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The Minister for Communications and IT, Mr Arun Shourie (extreme right), with Mr N. K. Goyal, President, TEMA, and Mr Prithipal Singh, CMD, BSNL, at a press conference in the Capital on Tuesday.

NEW DELHI, July 8

FOLLOWING objections raised by the security agencies to increasing the FDI sectoral cap in telecom, the Department of Telecommunications (DoT) has recommended an alternative route of placing FII investments outside the existing sectoral cap subject to an overall investment cap of 74 per cent.

This was disclosed by the Union Communications Minister, Mr Arun Shourie, in the sidelines of a press conference to announce changes in the procurement policies of Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).

"We have discussed the matter with the security agencies and since they are not comfortable about passing on management control to the foreign promoters, we have suggested that an alternative route of raising FII limit may be considered. This will be placed before the Cabinet before a final decision is taken", he said.

Earlier, announcing the changes made to the procurement policies, Mr Shourie stated that these would streamline the procedures and bring about more transparency in the system. Especially, since the tenders issued by both the PSUs cross the Rs 15,000-crore mark every year. The new policy includes a sharp cut in the processing time, validity period and flexibility to place repeat orders.

The tender processing time has been cut down from 180 days to 120 days. Accordingly the bid validity period has been reduced from 210 to 150 days and the validity of the Bid Bond has also been reduced to 180 days. Both the PSUs have also been given the freedom to decide the methodology to be adopted for procurement taking into the consideration the cost, time and business opportunity.

"Guidelines have been issued to make the initial 90-95 per cent payment to various vendors within three weeks of receipts of invoices/ bills for the supply of materials. It was agreed to review the payment position after three months and if certain issues / problems need to be sorted out, then needful will be done and situation reviewed after next three months. In the event of payment getting delayed then BSNL would review the payments to be made at circle level," he said.

The Minister also noted that it has been decided to publish an annual calendar of tenders, which will be updated monthly.

While there will be no change in eligibility criteria once the tender has been floated, the bid security will be two per cent subject to a maximum of Rs 2 crore. If a bidder does not accept the purchase order as per the offer given by him, he will not be eligible to participate in the tender for the same item for one year with effect from date of issue of the order, he said.

The deliver period has been scaled four from four to eight months. Pending performance bank guarantees will be released within the next 90 days, while pending provisional prices cases will be resolved in the next 90 days. Arbitration by a panel of ex Department officers would be considered and if needed, the existing arbitrator would be changed with mutual agreement between vendors and BSNL/MTNL.

"A working group has been formed to study transition to new technologies in next five years. A system is being devised to incentivise early deliveries by vendors. Also, the information regarding the stocks available at BSNL/ MTNL stores, purchase orders issued and pending bills of suppliers for payment is proposed to be available on departmental Web site," the Minister noted.

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