Almost two years after floating a tender for procuring 93 million GSM lines including 3G lines, PSU BSNL scrapped the tender on Friday as suggested by the panel headed by Sam Pitroda.

Earlier the CVC as well as DoT had recommended BSNL to scrap the tender. But the BSNL Board had opposed such ideas. However with Sam Pitroda, who has been appointed by the PMO to review the financial performance of BSNL and suggest ways to improve the PSU’s performance, recommending the scrapping of tender, there was little choice left for BSNL.

BSNL is now expected to go in for a much reduced procurement quantity and the tender may also be on a managed services model as recommended by the panel.

The move obviously will affect the shortlisted vendors, Ericsson and Huawei. Ericsson was shortlisted to deploy solutions for the North and East zones while Huawei was shortlisted for the South Zone.  There was no shortlisted vendor for the West Zone. Other bidders included Alcatel-Lucent, Nokia Siemens Networks and ZTE.

As soon as BSNL’s selection of vendors came out in the open, the tender emerged into a full blown controversy. To start with, BSNL had to face questions regarding its choice of Chinese vendor, Huawei Technologies which was alleged to have a tainted background with one of its promoters being close to the Chinese army. BSNL was also charged of favouritism to Huawei

But the BSNL Board refuted these charges and pointed out to the fact that almost all private operators use telecom gear manufactured by Chinese vendors.

Later on Ericsson became the focus of controversy with concerns that the vendor may benefit out of the fact that there was no other shortlisted vendor and hence BSNL will not be able to optimally negotiate with the vendor over price.

BSNL’s Unions have strongly resisted any move to scrap the tender. The Unions allege that industry lobbies are preventing BSNL from procuring telecom equipment. While the Unions and the BSNL Board are at loggerheads on most of the issues, for a change, in case of this tender, the two sections held a clear stand of going ahead with the procurement. However the recommendations of the panel headed by Sam Pitroda were too compelling for the BSNL Board to resist.