Cabinet approves next round of spectrum auctions; India-USA MoU among its key decisions

On Wednesday, the Union Cabinet chaired by Prime Minister Narendra Modi deliberated and zeroed down on some key decisions. These decisions included the approval of the next round of spectrum auction, revised cost estimate of the northeastern region power system improvement project and also transfer of sugar export subsidy directly to the farmers' accounts. The Cabinet has also approved a Memorandum of Understanding (MoU) between India and USA for exchange of information in the electricity sector. 

Cabinet's key decisions on Wednesday:

1. Approval of MoU between India and USA 

The Cabinet gave its approval for the Central Electricity Regulatory Commission’s proposal for entering into a Memorandum of Understanding between Central Electricity Regulatory Commission (CERC), India and Federal Energy Regulatory Commission (FERC), United States of America (USA) for exchange of information and experiences in areas of mutual interest to both in the electricity sectors. The activities under the MoU include: 

• Identify energy-related issues and develop topics and possible agendas for the exchange of information and regulatory practices in areas of mutual interest
• Organize visits by Commissioners and/or staff to participate in activities at each other’s facilities
• Participate in seminars, visit, and exchanges
• Develop programs of mutual interests and where appropriate hold these programs locally to enhance participation
• When practical and of mutual interest, provide speakers on energy issues and other personnel (management or technical

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2. Auction of spectrum

The Cabinet approved a proposal of the Department of Telecommunications to conduct spectrum auction through which spectrum will be assigned to the successful bidders for providing commercial mobile services. The auction will be for spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands. Spectrum will be offered for the assignment for a validity period of 20 years. A total of 2251.25 MHz is being offered with a total valuation of Rs. 3,92,332.70 crore (at reserve price). By winning the right to use spectrum through the auction, incumbent telecom service providers will be able to augment their network capacity whereas new players will be able to start their services.

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Detailing on the process of auction, the Cabinet has informed that successful bidders may pay the entire bid amount in one go (upfront) or may exercise an option to pay a certain amount (25% for spectrum won in 700 MHz, 800 MHz, 900 MHz bands or 50% for spectrum won in 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands) upfront and the remaining amount in a maximum up to 16 equated annual instalments, after a moratorium of two years. Additionally, successful bidders will also have to pay 3% of the Adjusted Gross Revenue (AGR) excluding wireline services as spectrum usage charges for the spectrum won through this auction.

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3. Assistance of about Rs. 3,500 crore for sugarcane farmers

The Cabinet has also approved assistance of about Rs. 3,500 crore for sugarcane farmers. Farmers sell their sugarcane to the sugar mills, however, the farmers are not getting their dues from the sugar mill owners as they have surplus sugar stock. To address this concern, the Government is facilitating the evacuation of surplus sugar stock. This will enable payment of dues of the sugarcane farmers. Government is expected to incur about Rs. 3,500 crore for this purpose and this assistance would be directly credited into farmers’ accounts on behalf of sugar mills against cane price dues and subsequent balance, if any, would be credited to mill’s account.

Farmers sell their sugarcane to the sugar mills, however, they are not getting their dues from the sugar mill owners as they have surplus sugar stock. This decision is expected to benefit the five crore sugarcane farmers and their dependents, as well as the five lakh workers employed in the sugar mills and related ancillary activities.  

4.  Revised cost estimate of North Eastern Region Power System Improvement Project

The Cabinet Committee on Economic Affairs approved the Revised Cost Estimate (RCE) of North Eastern Region Power System Improvement Project (NERPSIP) at an estimated cost of Rs. 6,700 crore. The scheme is being implemented through POWERGRID, a Public Sector Undertaking (PSU) under Ministry of Power in association with six beneficiaries - the North Eastern States - Assam, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura and is targeted to be commissioned by December 2021. After commissioning, the project will be owned and maintained by the respective North-Eastern State Utilities.

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