The total revenue of the government from sale of spectrum for both 3G and BWA stands at over Rs1.06 lakh crore, more than thrice the earlier projection of Rs35,000 crore by finance minister Pranab Mukherjee in his Budget speech in February this year
Exceeding all hopes, the auction for spectrum today ensured Rs106,336 crore to the government, over three times the original estimate, with successful bidders for Broadband Wireless Access (BWA) committing over Rs38,617 crore, reports PTI.
Internet Service Provider (ISP) Infotel emerged as the only pan-India winner for BWA spectrum by committing Rs12,872.52 crore.
Along with the BWA proceeds, that the exchequer would get later this month, the Rs67,719 crore received from third generation (3G) spectrum winners would help the government go a long way in managing its deficit and reduce borrowings.
In the union budget this year, finance minister Pranab Mukherjee had taken into account an estimated Rs35,000 crore from sale of spectrum.
In BWA, the government auctioned two slots of 20 MHz each. Besides Infotel, US-based Qualcom bagged four circles of Delhi, Mumbai, Kerala and Haryana.
Qualcom would have to pay Rs4,912.54 crore. Bharti also bagged four circles-Maharashtra, Karnataka, Kolkata and Punjab-for Rs3,314.36 crore.
Aircel bagged eight circles, mostly in category B and C areas for Rs3,438.01 crore.
On the lines of 3G, Mumbai and Delhi received the highest bid amounts of Rs2,292.95 crore and Rs2,241.02 crore, respectively.
State-owned Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), which have been given BWA spectrum ahead of the private players, will have to pay the equivalent of the winning bid in each service area.
As many as 11 companies, including Bharti Airtel, Reliance, Idea Cellular, Aircel, Vodafone and Tata Communications Internet Services, participated in the auction for Broadband Wireless Access spectrum.
BWA spectrum enables high-speed Internet access as well as Internet telephony and TV services. It can also be used for voice and high-speed data services.
States like Gujarat, Haryana and Punjab have allowed their industrial customers to purchase power in the open market and tried to solve their power deficit problem to some extent. Maharashtra, on the other hand, continues to refuse open access permission to its industrial customers
While Maharashtra struggles to meet its retail customers' power requirements, it continues to refuse permission to industries willing to purchase power from the open markets. The State is in a soup, thanks to its own decision of zero cross-subsidy surcharge.
Power is the most critical input for most industries. This is why industries are ready to purchase power in the open market even at far higher rates. However, industries in Maharashtra are forced to access power from the State distribution utility, as they are not allowed to access the open power market.
The Maharashtra State Electricity Distribution Company Ltd (MAHADISCOM) has been refusing to grant open access permissions to a number of its industrial customers. "MAHAVITARAN (Maharashtra State Electricity Distribution Company Ltd) is opposing open access without cross subsidy surcharge," said Subrat Ratho, energy secretary, government of Maharashtra on being questioned why industries in Maharashtra cannot purchase power in the open market like in the States of Haryana, Punjab and Rajasthan.
For anybody to trade power in the open access (both sell and purchase), permission from the State Load Dispatch Centre (SLDC) is required. However, industrial customers of MAHADISCOM need permission from the distribution utility as well. MAHADISCOM, however, has been refusing to grant such permissions.
The zero cross-subsidy surcharge has become a major hiccup in this issue. Industries are the high-end customers of the State distribution utility who compensate for other customers like farmers and retail customers.
Ideally, when such customers access an alternate power supply source, they are expected to pay a cross-subsidy surcharge, whatever percentage is applicable in the respective State.
In Maharashtra's case, the cross-subsidy surcharge is nil. Hence, MAHADISCOM will suffer on these lines. This is the main reason for the its unwillingness in granting permissions.
Interestingly, States like Punjab, Gujarat, and Rajasthan have allowed their industrial customers to purchase power in the open market. All these States charge a certain amount of cross-subsidy surcharges for open access. For example, as on March 2009, Gujarat Electricity Regulatory Commission (GERC) has a cross-subsidy surcharge for open access at Rs0.51 per unit.
"Industrial customers from such States first turned to the open market during load-shedding hours. However, they now save a large amount by purchasing power when the rates are low or during off-peak hours," said an ex-employee from one of the power exchanges.
However, this situation may change with the new cross-subsidy surcharge policy draft pending with the Maharashtra Electricity Regulatory Commission (MERC). On the latest heard about the policy, MAHADISCOM is expected to submit its comments on the policy by the end of this month.
"No concrete decision has been taken on it so far. We are supposed to submit our comments by the end of this month," said S V Bapat, superintendent engineer, tariff regulator cell, MAHADISCOM. An email sent to VP Raja, chairman, MERC two days back remained unanswered till the time of writing this story.
The National Tariff Policy envisages the cross-subsidy surcharge to be reduced in a linear manner to a maximum of 20% of its opening level by the year 2010-11.
TDR prices will go up as a lot of demand for these rights has been created now by the court’s decision. Ergo, real-estate prices may go up further
The Bombay High Court on Thursday dismissed the Maharashtra government's decision to increase the floor space index (FSI) in Mumbai's suburbs from 1 to 1.33. In 2008, the Maharashtra government, in its State Budget, increased the floor space index (FSI) in Mumbai suburbs from 1 to 1.33. Additional FSI increase of 0.33 could have been purchased by the developers from the government as specified by the State government in its 10th April notification.
A public interest litigation (PIL) was filed by Amit Maru and Arun Gaikwad (both practising engineers and architects) last month alleging that the increase in FSI would lead to more construction and put a heavy burden on the infrastructure in the suburbs.
"The court's decision will force developers to buy transfer of development rights (TDRs). TDR prices might go up in the future as a lot of demand is created in the market now (for these rights)," said Pankaj Kapoor, founder, Liases Foras.
The maximum permissible FSI in the city's suburbs remain the same, i.e. 2. Earlier, developers had to buy 0.67 extra FSI, when an FSI of 1.33 was allowed by the government. The 0.67 FSI was available at a nominal price from the government. But now developers have to buy 1 FSI rather than 0.67 FSI at a higher price through TDR if they want to utilise the maximum developable area.
The 10th April notification stated that the additional FSI was available at a cheaper price than the prevailing TDR prices in the market. Developers were expected to opt for this and hence TDR prices started falling last month. There are a lot of redevelopment projects currently being developed in suburban Mumbai and TDR forms an important part of them.
"The FSI remains same for the suburbs but the TDR prices will go up," said Pranay Vakil, chairman, Knight Frank (India) Pvt Ltd.
Currently TDR prices vary between Rs2,400 per sq ft to Rs2,800 per sq ft. After the High Court decision, TDR prices will shoot up and developers like HDIL and Ackruti City will benefit from it as they generate a lot of revenue through sale of TDRs.
"Developers have to buy TDRs at an incremental price. Extra FSI is no more available at a nominal price. Owners and developers were buying TDRs anyway, but their dependency on TDRs is now increased," said Ashutosh Limaye, associate director-strategic consulting, Jones Lang LaSalle Meghraj.
While the maximum FSI possible for a normal suburban property still remains 2.00, the difference is:
1. To achieve 2.00 FSI, the owner/developer has to buy TDR, as premium FSI is no more available, resulting in increase in demand of TDR and thus a likely increase in prices of TDR. Eventually, it means an increase in cost of projects, meaning increase in real-estate prices.
2. While the premium FSI was decided by the government and was defined and thus known and fixed, the TDR sale and purchase is a market phenomenon. Thus the prices are variable depending on location of TDR generation and location of TDR deployment. Thus, there is a degree of uncertainty in pricing that will be added.