The Comptroller and Auditor General has started inquiries into a 2005 agreement signed between Indian Space Research Organisation's comercial arm Antrix Corporation Ltd and Devas Multimedia Pvt Ltd, which involved ISRO launching two satellites for Devas but automatically bestowing on the latter unbridled use of 70MHz of scarce S-Band spectrum over a 2-year period, reports The Hindu.
ISRO is under Department of Space, which is directly under the Prime Minister's charge.
The newspaper reported that according to preliminary CAG estimates, this spectrum largesse to a privatge customer could have caused the exchequer a loss in excess of Rs 2 lakh crore.
According to the contract with Devas, Antrix would have earned $ 11 million a year per satellite for 12 years.
By comparison, the presumptive loss incurred in the allocation of 2G spectrum by the DoT, as estimated by the CAG, is Rs 1.76 lakh crore.
Under the deal, Devas Multimedia is to get access to 70 MHz of broadband spectrum in the 2500 MHz band. This was once used by Doordarshan to deliver programmes by satellite to all parts of India but is now considered to be of enormous commercial value for high-speed terrestrial mobile communications.
In 2010, the Union government got nearly Rs 67,719 crore from the auction of just 15 MHz of similar airwaves for 3G mobile services.
Devas Multimedia is a company in which Deutsche Telekom is a minority equity stakeholder. Dr M G Chandrasekhar, Devas Multimedia chairman, is a former Scientific Secretary at ISRO, the report says.
Although the Space Commission in July 2010 strongly objected to the contract and recommended that it be scrapped, this has not happened. However, Devas Multimedia has been given some spectrum to conduct trials.
The CAG, the report says, is reported to have asked for an explanation from the Department of Space on the preferential allocation of S-band spectrum without DoS/Antrix going through a competitive bidding process.
The CAG was alerted because unlike in earlier contracts, ISRO placed no restrictions on Devas Multimedia for onward leasing of spectrum. That means the company could make huge amounts of money by sub-leasing its privileges.
This is said to be the first time that S-band, which ranges from 2500 to 2690 Mhz, has been opened up to the private sector. The Hindu group's business paper, Business Line, is credited with breaking the story.
The CAG is concerned that ISRO's internal procedures were flouted, while the Prime Minister's Office, the Cabinet, and the Space Commission were not fully informed about the contract, including the underestimation of ISRO's costs, The Hindu reported.
On the other hand, Devas Multimedia issued a press release on Monday night saying that it does not own any spectrum, it only provides services.
The press release said:
"There are factual inaccuracies in the stories reported, and Devas Multimedia has not received any communication, regarding the contract,from ISRO/Antrix or any other government agency. We do not own any spectrum,and the services we provide will be based on satellite transponders leased from ISRO/Antrix, wherein both - the satellite and spectrum - belong to the space research organization.
"Contrary to reports, the GSAT 6 satellite programme already has approval from the Union Cabinet and Space Commission for its services, and Devas is developing an innovative satellite system." With reputed investors backing the company, Devas has already secured permanent Government approvals and licenses to offer ISP services on its system,for which specific time-bound technical trials were conducted in 2009."