DoT section moves note on telcos' bank guarantee in AGR issue

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SME Times News Bureau | 17 Feb, 2020
Department of Telecom's Controller of Communication Accounts (CCA) wing has initiated a process to be ready for invocation for bank guarantees of telcos before the next hearing at the Supreme Court on March 17 or closer to it in case of non-payment of AGR dues.

It has also sought opinion from the Law Ministry on the issue.

The DoT has started the process with the competent authority moving the internal note on bank guarantee encashment for the DoT Secretary and then Communications Minister Ravi Shankar Prasad but the final call will be taken by the minister if there is a need for it.

It would mean if there are no recoveries before March 17 or days close to it, the DoT can use the BGs to recover its dues but the preparatory ground work has to be ready for such a move with necessary approvals and legal views supporting it, particularly in view of last hearing at the SC where DoT was slammed for restraining recoveries, said sources.

Concurrently the ministry has sought the Law Ministry's views on the encashment of the telcos' bank guarantees, in case they fail to pay up before March 17.

Airtel on Monday paid Rs 10,000 crore towards AGR and its officials said it is currently under a self-assessment process and in case of any discrepancy, it will bring it to the notice of the DoT. Airtel is facing a DoT demand of Rs 35,500 crore.

Vodafone Idea, which faces maximum risk of survival on payment of AGR dues, on Monday moved the apex court, stating it can as of now pay only Rs 2,500 crore of the arrears to the government and will follow it up with another Rs 1,000 crore by February 21.

The telecom firm also appealed to the top court that the DoT should not take any coercive action and invoke bank guarantees, as an action of this nature would have consequences and it would eventually hamper their operations.

The Supreme Court declined to entertain the telco's plea seeking "no coercive action". According to the counsels, Vodafone contended before the court that Rs 3,500 crore is 50 per cent of its estimated principle AGR dues of Rs 7,000 crore.

Vodafone is estimated to pay Rs 53,000 crore to the government as part of its AGR dues. According to reports, it has informed the government that it is examining all avenues as to how much of AGR dues it could pay off.