Patchwork long-distance policy to be restrictive, calls for entry fee
New Delhi: The new telecom policy for long distance telephony has become a "patchwork" policy that attempts to take into account the views of the department of telecommunications, the current and former Trai and recommendations of agencies like the NCAER.

It restricts entry, imposes entry fees and revenue shares and prohibits long-distance operators from carrying intra-circle calls. The ban on intra-circle traffic has been imposed since the government is of the opinion that it will violate the agreement with the basic service operators in those circles.

Trai’s proposal of auctioning the percentage of revenue to be shared has been rejected by the government, which has also proposed a one-time entry fee to be auctioned among the four new players. In addition, each player will have to pay a pre-determined revenue share, which will be 10 per cent of total revenue plus an additional amount which will comprise each operator’s universal service obligation. This additional amount collected is expected to fund the rollout of telecom services in remote and inaccessible areas.

The DoT has also ruled against fixed phone operators from carrying each other’s traffic, arguing that each operator should expand its own market.

The new policy has fixed the total number of players to five, which includes the department of telecom services. The policy also states that in case mergers and acquisitions reduce the number of players to two — DTS and one private player — the government reserves the right to open up the NLD market to unlimited entry before the five-year period ends.

The government has decided that infrastructure providers who provide end-to-end bandwidth (category II IPs) will have to pay revenue shares, since they fall under the category of service providers under rules framed by Geneva-based International Telecommunications Union.
Back to News Review index page  

Government may open international telephony sector before 2004
New Delhi: India, which currently has the highest international telephony rates in the world, could well see cheaper call rates well before 2004. The government had earlier agreed to review the opening up of the international telephony sector to competition only by 2004. However, the minister for communications has recently stated that the government could well look into opening up the sector well before the 2004 deadline.

If competition is introduced in this segment, ISD rates are expected to fall. Currently, the ISD tariff in India is one of the highest in the world.

In an to the publication, Economic Times, the minister stated that VSNL’s monopoly could well end before 2004. The government has already broken VSNL’s monopoly in international connectivity for Internet services as private Internet Service Providers are allowed to directly connect to international carriers through their own gateways.
Back to News Review index page  

Call stays in range, as securities decline
Mumbai: Inter-bank money market rates stayed within the seven per cent range, while security prices took a hit due to the volatility in the foreign exchange markets. Overnight rates ruled around seven per cent as easy liquidity conditions continued.

Call rates are expected to stay at the current levels for today also. While the central bank did not receive any bids for its repo or reverse repo auctions, the prices of government securities fell due to the volatility in the foreign exchange market by five paise in the short-end and up to 12 paise in the medium-to- long-term maturities.

The expected lull in forex market would keep most bankers on the sidelines. The market continues to anticipate RBI to announce an auction following the Rs 3,000-crore private placement of the 11-year security. Most expect the bond auction to be announced for the longer tenor of above 10 years.
Back to News Review index page  

Oil companies join hands to abolish credit
Ahmedabad: Taking refuge under the rising price of crude products, the four oil companies -- Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and IBP Ltd -- have decided to scrap credit sales for their customers across the country.

The companies have issued a joint circular to all their customers, making it very clear that all petroleum products would henceforth be available only on a cash and carry basis.

A Reliance spokesperson denied that the company would be leveraging on the decision taken by the state-owned oil companies. According to him, it had always been the company's practice not to offer credit if it could be helped.
Back to News Review index page  

Arthur Andersen India shortlisted to advise Mauritius Govt
Mumbai: The Government of Mauritius has appointed Arthur Andersen India, to assist it in the restructuring of the power sector in that country and a select a strategic partner for the Central Electricity Board (CEB) of Mauritius.

The assignment, won in the face of a competitive bidding process, will be managed by Arthur Andersen's Power & Utilities practice in India.

Arthur Andersen will help in defining the industry structure and providing inputs in drawing up the enabling legal and regulatory framework, a company press release said here on Thursday.
Back to News Review index page  

Yet another power major pulls out
New Delhi: Joining the growing list of multinational power companies leaving India, French power major Electric de France (EDF) has decided to pull out of the $1.4-billion fast-track Bhadravati power project promoted by the Mittals of the Ispat group, after almost seven years as a co-promoter of the project. The Indian office of EDF, however, states that the group was committed to its other projects in India related with transmission and distribution.

EDF holds 15.2 per cent equity in the Bhadravati project, while Alstom Power holds 31.8 per cent, and the Mittals over 50 per cent.

Despite Bhadravati being on the list of fast-track projects, its fate has been hanging fire for the past seven years. Even now, there is no clear commitment towards a proper escrow cover for the project, and the fuel-supply agreement has also not been finalised.

The project was to achieve financial closure in January 1998, followed by a six-month extension given by the Maharashtra government till September 1998.A revised power-purchase agreement was signed between the promoters and the state government in August 1998, and it was expected the promoters would achieve financial closure by end-1999. However, no substantial progress was made, as a result of which EDF decided to pull out of the project.
Back to News Review index page