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CAG rips into Isro for Devas deal, clears PMO
-The Times of India

India's space agency Isro bent rules for private firm Devas to sign a deal for multimedia services, projecting a paltry Rs 1,120 crore revenue over a 12-year period that would not even have covered the cost of launching two satellites for the promised service, the Comptroller and Auditor General (CAG) has said. 

In a report submitted to Parliament on Tuesday, the official auditor gave the Prime Minister's Office the benefit of doubt, taking the view that retired senior officials led by ex-space secretary Madhavan Nair - already blacklisted by the government - hoodwinked the government. 

While not offering loss estimates, the report said Isro gave Devas use of 20 transponders, or 90% of satellite capacity, for the 2.6 Ghz band which has been auctioned in most developed economies. In India, auction of 3G spectrum earned Rs 67,719 crore. Further, the auction of broadband wireless access (BWA) spectrum yielded Rs 38,543 crore. 

Stating that BWA can benchmark value of space band spectrum committed to Devas, CAG noted the firm offered superior services. "It is evident that service offered (by Devas) had considerable fiscal potential... by not following due process, the revenue interests of the government have been totally ignored," the auditor said. 

CAG said Isro cleared the Devas proposal of a hybrid system delivering internet services, including multimedia through landline and satellite to both home and mobile or vehicles, despite being aware that the deal needed multi-ministerial clearances. 

At the very outset itself, when the deal was signed in 2006, Isro did not consult ministries of information and broadcasting and telecommunication over use of spectrum for wireless and broadcast services. Approval from Cabinet for Devas services was not sought, licensing conditions ignored and satellite communication (SATCOM) policy violated. 

CAG was scathing on Nair's role in the Devas deal, pointing out that between 2004 and 2009, he performed multiple roles. As Isro chairman, he set up a committee to finalize financial aspects without having a member with such expertise. As chairman of Antrix, the commercial arm, he allowed a transponder lease agreement. 

As secretary DoS, he concealed from the Cabinet the purpose of GSAT 6, says the CAG report. As chairman of Space Commission, he again hid the Devas deal, it adds. Finally, as chairman of Intsat coordination committee, he did not convene a single meeting after 2004. 

While slamming Nair and senior Isro officials for offering Devas a sweetheart deal, the auditor raised oversight issues although it spared the PMO, which supervises the department of space. 

An initial leaked draft had reportedly put the loss due to the Devas deal at Rs 2 lakh crore. In the final report, CAG pointed out that the two satellites, GSAT 6 and GSAT 6A, were projected to cost Rs 1,254 crore while the expected revenues were Rs 1,120 crore. 

The department of space earmarked 70 Mhz of spectrum for Devas for both telecommunication and broadcasting services with the GSAT 6 project report specifically mentioning in March 2005 that the satellite was being developed for the firm. Thereafter, the cost of GSAT 6A was "suppressed" to ensure its cost remained less than Rs 150 crore, as expenses beyond this would need Cabinet approval. 

CAG put "under costing" of GSAT 6A at Rs 122 crore at a minimum and when DoS took the Devas proposal to the Space Commission in 2005, the department failed to reveal that it had already committed space segment or S-band capacity to the firm. 

On the DoS defence that it did not allot spectrum and it was up to Devas to get the necessary clearances, CAG said that "the fact remains that 70Mhz of the S-band spectrum had been earmarked for Devas in the Antrix-Devas agreement". 

The Devas technology gave it a massive lead over existing 3G and DTH operators and significantly, the telecom ministry's wireless advisor in March 2012 said the price discovered in the broadband wireless access auction could be taken as value for spectrum in the S-band "since BWA spectrum was from this band and the BWA auction generated Rs 38,543 crore for a bandwidth of 60 Mhz". 

While the BWA auction was for 60 Mhz and for a wireless internet broadcasting service through terrestrial towers, Devas was offering a superior service to consumers who used fixed as well as mobile receivers through satellite and terrestrial systems. This suggested the deal was worth much more than what it was signed for. 

The report also pointed out that DoS gave its scarce orbital slot at 83 degrees East for the two satellites and did everything it could to boost the value of the firm's shares. "Devas without engaging in any trading, manufacturing or ground segment activity could raise Rs 575 crore from three foreign investors," the report said, adding that Isro offered amendments to the contract that helped Devas to woo investors.