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The government on Thursday cleared guidelines of the much-delayed FM Radio Phase III expansion that will allow private radio channels to broadcast news of All India Radio and enable revenue generation of Rs 1,733 crore (Rs 17.33 billion) from the auction of license for services in 227 cities.
A meeting of the Cabinet chaired by Prime Minister Manmohan Singh also approved hiking of foreign investment limit on private FM radio broadcasting company to 26 per cent from the current 20 per cent.
"The FM Phase-III policy extends FM radio services to about 227 new cities, in addition to the present 86 cities with a total of 839 new FM radio channels," Information and Broadcasting Minister Ambika Soni told reporters in New Delhi.
She said the FM phase III policy will result in coverage of all cities with a population of one lakh and above through private FM channels.
"Through the auction of license of the FM Phase III expansion, the government is expecting Rs 1,733 crore of income," she said.
The Phase I and Phase II policies have resulted in a total revenue accrual of about Rs 1,733 crore up to May 31, 2011 by way of one time entry fee, migration fee and annual fee among others.
Soni said the private FM channels will now be allowed to carry news items from AIR. Earlier they had not been allowed.
Asked why news from agencies has not been allowed to be broadcast when even AIR is also sourcing from newswires, she said, "I don't rule it out. When greater liberalisation takes place in time to come, it may be considered. It depends on what various ministries say and how the system functions."
Soni said the I&B ministry had discussed the issue of allowing the private FM channels to air news sourced from agencies with other ministries, including with the home ministry.
Asked why the private broadcasters have not been not allowed to air their own news, she said: "Gradually we are allowing news in the private radio stations and let's see how it goes forward."
In order to roll out the new stations the government will conduct e-auction of the licenses in batches and the number of batches will be decided by the I&B ministry.
"In all probability, the e-auction will be held in two batches and the process is expected to be completed within this financial year," a senior I&B Ministry official said.
Soni said the I&B ministry will be appointing an independent expert agency to conduct the e-auction.
Giving the highlights of the policy, she said: "FDI and FII investment in a private FM broadcasting company has been increased from 20 per cent to 26 per cent."
As per the new policy that has taken nearly three years to materialise, the FM radio operators will be permitted to air news bulletins of AIR in unedited format.
Moreover, non-news broadcasts pertaining to information on sporting events, traffic and weather, cultural events, festivals, examinations results, admissions, career counseling and employment opportunities among other have also been allowed.
Soni also said that the limit on the ownership of channels at national level allocated to an entity has been retained at 15 per cent of the total stations.
However, channels allocated in Jammu and Kashmir, North Eastern states and island territories will be allowed over and above the 15 per cent limit to incentivise the bidding of channels in such areas.
She said license for stations in these regions will be at half the rate of annual license fee for an initial period of three years.
"Moreover, they will be allowed to utilise Prasar Bharti infrastructure at half the lease rentals in the special regions," Soni added.
Under the new policy, the license fee have been given for a period of 15 years as against the existing 10 years.
The minister said for the existing license, a provision has been kept in order to extend it and to decide on the fee to be charged for the same.
In order to make it easier for operators, the policy has allowed only three channels in D category cities, as against the existing four. It has also allowed a company to own more than one channel in a city but not more than 40 per cent of the total channels in the area.
With an aim to give greater freedom to the promoters to change shareholding pattern, the policy has reduced the lock in period to three years from five years.
Reliance seeks adequate time to respond to CAG report
Reliance Industries has sought 'suitable opportunity' to respond to a CAG report that indicts it on receiving undue favours from the oil ministry, saying the official auditor had not discussed many of the findings mentioned in the draft report.
Reliance executive director P M S Prasad on June 29 wrote to oil secretary G C Chaturvedi protesting that his firm has not received the full copy of the draft CAG report and was never consulted on many issues pointed in the reports.
"...the subject matter of many of the observations being reported does not seem to have constituted the substance of any of the audit memos we had received from the CAG team during the audit of KG-DWN-98/3 (or KG-D6) block at our premises between December 2009 to September 2010.
"Needless to say neither were any of these issues raised by CAG during our brief conference with the CAG team on June 4," he said in the letter.
A spokesperson of CAG could not be reached for comments. CAG's June 7 draft report said the oil ministry and its technical arm, the Directorate General of Hydrocarbons, favoured Reliance by turning a blind eye to the Mukesh Ambani firm increasing capital expenditure on its flagship KG-D6 gas fields and allowed it to retain entire exploration acreage in violation of the Production Sharing Contracts (PSCs).
"All observations that are of material consequence to us as a contractor, and affect our rights as well as obligations under the PSC, need to be responded to by us in the interest of fair play and natural justice, particularly in relation to those observations in respect of which no memo was received by us during audit, seeking our comments," Prasad wrote.
Oil Ministry too had in a June 22 letter to CAG raised the issue of CAG not seeking comments from private firms like Reliance and Cairn India before before levying a series of allegations.
"In the interactive meeting (CAG had with firms before submitting the draft report) one of the operators gave a presentation on how the project was executed and no audit observations were discussed. In the other meeting, only one observation was discussed with the operator," it wrote.
"The operators were not given any draft report before this meeting so that they could have come prepared with some reply," the ministry wrote.
Prasad in the June 29 letter stressed that the process of giving contractors an opportunity to respond to any audit objection before preparation of the draft report was not followed.