When Kapil Sibal took over as telecom minister after the telecom scam broke, he made a stray statement that the licences would be cancelled and the process gone through afresh. Why have we not heard anything on that yet?
The 2G spectrum is something like Ali Baba's cave, isn't it? In the Arabian Nights story, the cave was filled with gold coins and jewels and diamonds and rubies and all that the heart could desire. The 2G cave is filled with something equally precious: telecom licences for the 2G spectrum.
These licences, according to the Comptroller and Auditor General of India, are worth a maximum of Rs1,75,000 crore, a value that, like the jewels in Ali Baba's cave, is beyond the comprehension of the ordinary human mind.
In the Arabian Nights, the cave was the treasure house of the 40 thieves. The 2G scam has its own version of the 40 thieves. Led by a not very imaginative fraudster who was minister for telecommunications, the 40 thieves looted the 2G cave; but they were caught red-handed. Some are in jail, but the big ones have not been touched.
This is one side of the story. The other side, on which few seem to be concentrating, offers hope beyond dreams to the treasury and hence to the common people of India.
The other side of the story is that treasures in the 2G cave still exist as potential wealth that only the Central government can exploit. The method is fairly simple, as simple as saying "open sesame" to open Ali Baba's cave.
The government has to cancel all the licences given by A Raja and his officials and auction the 2G spectrum bands once again. It can be done, there are no legal hurdles. In fact there is a compulsion to do so, because it has been shown that the process under which the licences were given was fraudulent.
When Kapil Sibal took over as telecom minister after the scam broke, he made a stray statement that the licences would be cancelled and the process gone through afresh. Nothing further was said about the matter.
What is the potential income to the country if this is done? The CAG used three methods to calculate what the exchequer would have gained if the proper procedure had been followed.
The first was based on the offer made by S-Tel, one of the applicants for the 2G licence, which was very high and therefore reflected the true value of a licence. Extrapolating the S-Tel bid to cover all the licences on offer, the CAG estimated that potential gain to the exchequer would have been Rs67,364 crore.
The second method was based on the price recovered by the 3G auction. The CAG reasoned that the price of 2G licences should have some relation to 3G. The CAG then came up with the figure of Rs1,76,000 crore.
The third method was based on the fact that some of the companies which got the 2G licences received foreign direct investment (FDI) in the form of equity, shortly after the allocation. The CAG reasoned that this equity came in only because of real value of the allocated spectrum. This can be construed as resale of the spectrum by the licensee and could be a valid basis for calculating the loss to the exchequer.The CAG placed it between Rs57,666 crore (based on Etisalat's investment in Swan Telecom) and Rs69,626 crore (based on Telenor's investment in Unitech).
So, what's stopping telecom minister Kapil Sibal from doing what he said he would do? What's stopping him from cancelling the licences, auctioning the spectrum again? Why doesn't he say "open sesame" and become the man who earns the country Rs1,76,000 crore. Mr Sibal, we hope, is canny enough to realise the political potential of a fresh auction: anyone who earns the country this huge fortune will surely become one of the country's greatest heroes.
But as things stand, it seems we the people have to say "open sesame" with a public interest litigation (PIL) in the Supreme Court.
(R Vijayaraghavan has been a professional journalist for more than four decades, specialising in finance, business and politics. He conceived and helped to launch Business Line, the financial daily of The Hindu group. He can be contacted at [email protected].)
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