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June 12, 1998


HCL Infosystems

Would you turn down Rs 6,000,000,000? Beni Prasad Verma did. And Rediff knows why.

Email this page to a friend. Sharat Pradhan in Lucknow

If it's politics, everybody's heard it all. But listen to this one: former communications minister Beni Prasad Verma turned down a Rs 6 billion telecom soft loan from the Asian Development Bank!

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For a country perennially clamouring for cheap money, this uncommon gesture has a surprisingly common root: corruption.

It transpired that Verma would have liked a particular private telecom company to bag the project for which the Rs 6 billion were sanctioned. When that did not happen, the former minister preferred to scuttle the loan than let it go to "rivals".

The gigantic soft loan would have wired the backward eastern Uttar Pradesh's 36,000 villages with a modern telecommunication network.

"But when the minister realised that the contract for the project would not go to a private firm of his choice, because of technical reasons, he preferred to turn down the entire funding," a senior ministry official revealed to Rediff on conditions of anonymity.

He claimed "it is unprecedented that we have ourselves refused a funding of this size".

The idea to link the neglected and economically backward eastern UP with an extensive telecom network came up in 1992.

The Department of Telecommunications had then made it clear that it would not have the resources for a project of such a scale and scope and put in a formal request to the finance ministry to arrange for a soft loan.

By 1993, the finance ministry had succeeded in working out an almost interest-free soft loan of $13 million from the ADB with a moratorium of four years. The terms spread the repayment over 24 years.

Thereafter, preparation of project specifications took three years and in 1997, a global tender was opened with a rider from ADB that evaluation must be completed by November 27, 1997.

This was followed by a tender evaluation report, prepared by a committee comprising five telecom officials of the rank of deputy director general.

Submitted on July 7, 1997, the report rejected all the 12 bids of multinational companies including Motorala, Alcatel, Erricsson and NEC on technical grounds. Instead, two Indian public-sector companies were shortlisted: Bharat Electronic Limited and Punjab Communications Limited.

The two decision parameters that tipped the balance in the favour of the Indian companies were 'technical and commercial specifications' and 'provenness'.

Eventually, PCL was cleared to take up the job. It had submitted a 'provenness' certificate from the Chinese telecom authorities as it had accomplished a task of similar nature there.

But no sooner than the news broke out, multinational companies began lobbying for the cancellation of the tender.

And interestingly, they succeeded.

On November 19, 1997, then Communications Minister Beni Prasad Verma wrote to Finance Minister P Chidambaram, warning that the "technical bid evaluation for this project is likely to extend beyond November 27, 1997," the deadline laid down by ADB.

He blamed the delay on the "complexities of the bids offered by the manufacturer and consequent necessity for detailed analysis of the bids".

He went on to add "it has now been decided not to go in for the loan as it would result in heavy commitment charges. The department will implement the rural telecom project through its own resources".

But as the ADB offer was about to lapse, the matter was brought to the notice of Prime Minister Atal Bihari Vajpayee who has responded favourably, particularly because his constituency lies in UP and a BJP government rules the state.

Highly placed sources reveal that Vajpayee has personally taken stock of the whole case and deputed Communications Minister Sushma Swaraj to ensure that the ADB offer remains alive.

A host of BJP members of Parliament from eastern UP have also urged the Swaraj to revive the project that could change the lives of millions in the centre of the Hindi heartland.

After all, it would also have a direct and immediate impact on the political fortunes of the ruling BJP, both in the state and at the centre.

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