Vol. 5 Num 158 Sat. October 30, 2004  
Front Page

Cellphone Network Maintenance
Tampering with BTTB deal to cost $37m

Bangladesh Telegraph and Telephone Board (BTTB) will overpay $37 million (Tk 223 crore) for maintenance of its cellular phone network because of 'clandestine' late changes in contracts with the suppliers.

According to the original terms and conditions of the deal that the prime minister had approved, maintenance cost for 13 years after first two years of guarantee period were to be covered by the supplying companies, in this case, Siemens and Huawei.

In April, the cabinet purchase committee recommended BTTB's $76 million purchase proposal for the cellular phone network with 250,000 lines. Later, the prime minister approved this largest telecoms project.

Once the mobile network is operational, BTTB gets free maintenance service for two years of guarantee period. According to BTTB's internal documents, it also receives Post Guarantee Maintenance Assistance along with On Demand Maintenance Support for free during the network's remaining 13 years of lifetime.

But while signing contracts with Siemens ($41 million) and Huawei ($35 million), the BTTB authorities had 'mysteriously' dropped the provision for 13 years of free On- Demand services. They had signed contracts that compel BTTB to procure services through annual maintenance contracts.

This sort of changes in the final contracts contradict the deal that the prime minister had originally approved. The BTTB then said free maintenance services are the contractual obligations of the contractors.

According to an internal report of BTTB, Siemens had proposed an annual maintenance fee of $500,000,which will cost BTTB $6.50 million to maintain the mobile network for 13 years. Huawei will charge, nearly five times higher than Siemens. In that case, maintenance cost for 13 years will stand at $30,599,660 as Huawei will charge $2,353,820 for annual maintenance.

Unauthorised changes made in contracts with Siemens and Huawei altogether will cost BTTB $37,099,660 to maintain the mobile network from its third year of operation, said a BTTB high official requesting anonymity.

"The prime minister has been kept in the dark about the implications of these late changes in contracts," said the official. He alleged that the suppliers' local aides, who maintain a close connection with the government hierarchy, successfully lobbied to have these changes incorporated in the contracts.

BTTB's internal reports say Siemens and Huawei signed Memorandum of Understanding (MoU) affirming unconditional free service obligations on June 10. But both the companies had dramatically backtracked and proposed the changes.

Huawei said they will provide services for free only 'in case of engineering defect or such situation when system completely shuts down beyond recovery'. "We suggest BTTB go for maintenance contract as soon as guarantee period is over," wrote Wang Shengniu, Huawei's Project Manager, to BTTB's procurement office.

Khalid Shams, general manager of Siemens, echoing his Chinese partner's view said, "Siemens strongly recommends that BTTB go for annual maintenance contract."

"Siemens will provide free service in case of engineering defect of our system or such situation when system completely shut down where BTTB cannot recover the system operation," he wrote.

Sources said the BTTB chairman verbally ordered the procurement office to stipulate the precondition of 'complete shutdown of network', under clause 27.2, in both the contracts. The chairman also asked to attach each vendor's annual service proposal as "Annex I" to the contract, which was signed on June 14.

"This absurd precondition will let both Siemens and Huawei dodge free services," said a BTTB source.

He explained, "BTTB's mobile network will have multiple exchanges and they will never simultaneously and 'completely shutdown beyond recovery', unless all exchanges are deliberately switched-off."

Wang Shengniu, Huawei's Project Manager could not be reached while Khalid Shams of Siemens refused to comment.

The BTTB Chairman Nurul Islam and Mohammad Obayedullah, director of BTTB's mobile project, too had denied The Daily Star any comment.

"It's a gross deviation from the purchase proposal the prime minister had approved," said M Hafizuddin Khan, a former comptroller and auditor general.

Free post-guarantee maintenance was an unconditional service in the purchase proposal.

"Once the prime ministerial approval was obtained, maintenance service was unfairly made conditional," he observed.

"It should be immediately probed and the persons responsible for such gross irregularities should be charged," said the ex-CAG, who later became an adviser to the last caretaker government.

Finance and Planning Minister M Saifur Rahman rejected BTTB's purchase proposal (for mobile phone equipment) in the cabinet purchase committee's meeting in January.

Later, in April, Saifur not only approved the deal he once dumped but rewarded it with additional funding.

The media many a time suggested involvement of some highly powerful cabinet members' children in this multimillion dollars public procurement. They, along with high-ups in the BTTB, have connived in potential waste of public money, media reports hinted.