MINISTER OF STATE IN THE MINISTRY OF RAILWAYS (SHRI DIGVIJAY SINGH
(a) to (g) RITES had signed a general Memoranda of
Understanding (MOU) with M/s. Global Tele Systems, USA on
3.10.97 for exploring the possibility of doing telecom
business jointly by utilising Railways’ right of way. This
MOU was of a general nature and no specific provision was
made in it for laying optical fibre cable between Chennai
and Delhi or Delhi and Mumbai. The MOU lapsed on 1.5.98
because M/s. Global Tele Systems did not show any further
interest in the matter.
RITES signed another MOU with M/s. BPL on 31.3.99 for
laying optical fibre cables between Mumbai-Chennai with
connecting links to Bangalore and Hyderabad. Salient points
of this MOU were :-
(i) RITES and M/s BPL were to jointly execute the above
work.
(ii) Spare telecom capacity created by OFC network, after
fully meeting Railway’s requirements, was to be
commercially exploited.
(iii) RITES and M/s BPL were to hold equity in the joint
venture in the ratio of 51:49, with RITES having higher (51)
equity share. The equity ratio was later to be changed to
50:50 with a condition that control of management of joint
venture would be with Ministry of Railways.
(iv) 20 % of net profit to be generated was to be given to
Ministry of Railways.
(v) Final joint venture agreement was to be cleared by the
Board of Directors of RITES and M/s. BPL.
(vi) Preparatory work was to start after signing of MOU, and
(vii) Unresolved disputes, if any, were to be settled as
per Arbitration Act.
RITES signed the MOU with M/s. BPL after taking
approval of its Board of Directors. As the MOU was only
an understanding between RITES and M/s. BPL in connection
with laying of optical fibre cable on Mumbai-Chennai route
after forming a joint venture, no approval for signing the MOU
was taken from Railway Board. Formation of joint venture,
however, needs approval of Ministry of Railways and the same
was not given because Ministry of Railways, in the meantime,
took a policy decision to build a nation-wide broadband
telecom and multi-media network by utilising Railways’ right
of way’ by laying optical fibre cable along 62,800 route kms.
of Railway track to facilitate- (a) modernisation of
Railway’s operational, safety and signalling systems; (b)
supplement national telecom infrastructure thereby spurring
growth of telecom, internet and IT-enabled services in all
parts of country, especially rural and backward areas located
in vicinity of Railway track; and (c) generate badly needed
revenue for implementation of Railways development and safety
enhancement schemes. Since these objectives were not being
achieved through piecemeal and fragmented approach of allowing
RITES and other Railway PSUs to lay optical fibre cable on
smaller routes like Chennai-Mumbai, Ministry of Railways did
not approve RITES’ proposal for formation of a joint venture
with BPL. To implement the broadband telecom and multi-media
network expeditiously. Railways have taken steps to setup a
professionally managed venture exclusively for building the
network and marketing the telecom. capacity and value-added IT
services.
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