The Indian government has set up a high powered review committee to investigate an S-band spectrum deal between Bangalore-based satellite services provider Devas Multimedia and Antrix, the commercial arm of the Indian Space Research Organisation (ISRO)….
The Indian government has set up a high powered review committee to investigate an S-band spectrum deal between Bangalore-based satellite services provider Devas Multimedia and Antrix, the commercial arm of the Indian Space Research Organisation (ISRO). The review will also consider how Antrix operates and whether it should be restructured.
The dispute stems from an agreement signed between Antrix and Devas back in January 2005, whereby Antrix would lease the latter 90% of the capacity on two S-band satellites, PS-1 and PS-2, to be built by ISRO for a total of US$300m over a 12 year period. While the birds are still under construction, Devas has already paid Rs583.7m (US$13m) as an upfront capacity reservation fee.
Almost a year later, in December 2005, the Indian government together with the Space Commission approved the construction of a separate S-band satellite, GSAT-6. A second S-band spacecraft, GSAT-6A, was subsequently ordered in October 2009. The proposals of the Department of Space in both cases did not make any reference to their utilization for the 2005 Antrix-Devas agreement. Accordingly, the Indian Government was under no obligation to utilize these satellites for the Antrix-Devas contract.
The move prompted a number of complaints and ISRO and the Department of Space (DOS) decided to set up a commission on December 2009 to investigate the Antrix-Devas contract.
However, Devas told SatelliteFinance that it “has never been informed by DOS/ISRO/Antrix at any time prior to 8 February 2011 that the Agreement was under review since 8 December 2009 and even to date we have received no official notices. On the contrary, Devas was provided written confirmation that all required approvals had been obtained from the highest levels for giving effect to the Agreement and repeatedly assured that the delays in delivery of the satellite capacity were only on account of technical issues.”
In spite of this, the DOS recommended in early 2010 that the Antrix/Devas contract should be annulled, claiming it had only been approved at the Antrix board level. In making its recommendations in July 2010, the Space Commission backed this view, citing national interest in terms of S-band spectrum. It added that a review into the workings and potential restructuring of Antrix should be undertaken.
Under the Antrix/Devas agreement, the contract can be terminated if Antrix fails to secure the necessary frequency and orbital slot to operate PS-1. The company must also reimburse Devas for what it has paid. Given that the Indian government has not allocated any S-band space segment to either Antrix or Devas and has no obligation to do so, the contract can be legally annulled, according to ISRO.
Devas hit back saying it has “a legally binding Agreement with Antrix Corporation, the wholly owned commercial arm of the Government of India’s Dept of Space / ISRO, dated January 28, 2005. Devas proceeded with the project after required consents and approvals were obtained within GOI [government of India], culminating with Space Commission and Union Cabinet, and the same were confirmed to us by Antrix in Feb 2006.”
A few days ago, both the government and the Comptroller and Auditor General of India announced they would review again the Antrix/Devas agreement.
Issues surrounding the S-band spectrum allocation come as India’s political life is still being rocked by the 2G scam scandal. Early February, former telecom minister A. Raja, as well as several officials and telcos executives, were arrested following allegations of favoritism in the allocations of underpriced 2G spectrum to telcos over two years ago, costing the government some US$40bn.
According to local reports, The Bharatiya Janata Party (BJP), the opposition party, branded the governmental review committee on the Antrix/Devas deal a cover-up for another potential scam, which reportedly cost a loss of several billions of rupees to the country. Both the government and ISRO denied those allegations, local reports wrote.