Government starts laying groundwork for 3G auction
By: Shahbaz Rana
ISLAMABAD: The government on Thursday held a pre-bid conference for prospective consultancy firms, which may be hired to ensure transparent auction of the third generation (3G) mobile telecommunications technology spectrum. The event marks the beginning of an auctioning process expected to generate at least $1 billion in revenues for the government.
The Pakistan Telecomm-unication Authority (PTA) had earlier sought proposals from “internationally reputed consultants, companies or consortia, aimed at assisting the PTA conduct the Mobile Cellular Spectrum License Auction in Pakistan.
The successful culmination of the pre-bid conference also marks the formal beginning of the process of issuance of 3G licences, which has been repeatedly haunted by allegations of corruption. Apart from the accusations, mishandling of the process has also delayed the 3G auction by at least a year.
The conference was attended by PTA officials, representatives from the Ministry of Information and Technology, the Frequency Allocation Board and prospective consultancy firms. Attendees were either present in person, or logged in via audio conferencing systems. Observers say the conference set the stage for the highly-anticipated transaction to be closed before the end of the current fiscal year.
The conference, hosted by the PTA, took decisions on several important issues. Participants hope these will help the government hold a transparent auction for the technology.
During discussions, the PTA turned down an objection raised by prospective consultancy firms regarding the risks arising out of the process. According to the minutes of the conference, prospective companies had said that the tone of the Request for Proposal (RFP) issued by the PTA was not correct, and it seemed that all risk had been shifted to the consultant.
The PTA argued that the RFP was designed to achieve a win-win situation for both the consultant and the client. The consultant will be responsible for ensuring a transparent and fair auction, optimising revenue received and promoting growth of telecom services, it said.
The PTA also rejected demands to extend the deadline for submission of bids by two weeks. However, it relaxed certain other criteria, while keeping the bid submission date unchanged at September 24.
According to the fresh calendar, technical bids will be opened on the 24th of this month; bidders will give presentations on the 26th and 27th; and technically-qualified bids will be finalised the next day. The PTA will then open financial bids on October 4, 2012, and the successful bidder will be issued a Letter of Intent the next day.
The government will award the contract on October 15, and the new consultant will be required to issue a fresh Information Memorandum on November 15, after getting approval from the PTA, along with a mutually-agreed schedule for domestic and international road shows.
It was decided that the contract, once awarded to a consultancy firm, shall only be amended if required through a mutual agreement between the consultant and the PTA. The government has said it will bear expenses for domestic road shows, while expenses for international road shows will be borne by the consultant, the PTA informed the meeting.
The PTA said that consultants mainly raised concerns on the extension of timeline for the submission of proposals, the drop dead fee and road show expenses.
The drop dead fee – applied to compensate the loaning institution for lost interest if a loan is secured and then becomes unnecessary because of a failed deal – was increased from $100,000 to $350,000 on the demand of prospective bidders.
The drop dead fee will be paid to the successful bidder in case the government abandons the auction at any stage after award of the contract to the consultant. The government will also be liable to pay the drop dead fee if the bidder offers a price higher than the reserve price, but the government rejects the bid. On the other hand, the successful bidder will pay the amount to the government if it fails to honour its commitment to the contract.
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