The private companies will now be required to pay the 20 per cent licence fees dues, the penal interest accruing on these dues as well as bank guarantees on the remaining 80 per cent of the dues to securitise their outstandings.

The decision to extend the deadline from February 15 came after the meeting between Prime Minister Atal Behari Vajpayee and Communications Minister Jagmohan. The operators had demanded a deferment of the deadline till March- end in the hope of the announcement of the new telecom policy by March-end.

Earlier thisweek, the PMO asked DoT to extend the deadline for paying the 20 per cent licence fee arrears till March 31. Jagmohan, however, had refused to buckle down under the pressure unless he had explained the issue personally to the PM.

The reasons given by Jagmohan, in a letter to the PM, stated that apart from the Rs 3,700 crore currently owed by private telecom companies to the Government, another Rs 566 crore would become due by next month. This would worsen the Government's chances of recovering the dues. In the same letter, Jagmohan had said that any extension to be given to the operators should not be beyond February 28, as no message should go out that companies could get away without fulfilling their contractual obligations. Private operators have been demanding a switch-over to a revenue sharing arrangement with the Government as the licence fees that they have quoted have turned out to be very high making their projects unviable in the face of dismal response from the market.

Jagmohan in his letter tothe PM has explained that this cannot be legally possible. Jagmohan had quoted the AG's advice in this regard stating ``it is essential that the Government's action should not transmit any signal that licensees can break licence conditions and remain in arrears for large amounts and then plead for major favourable changes on the grounds of financial hardships''.

Jagmohan also stressed in the letter that ``even if it is assumed that revenue-sharing would be accepted, the new policy cannot be applied retrospectively nor be restricted to existing licensees''. He further ruled out conversion of the existing licences to a revenue-sharing regime saying ``new bids in accordance with new terms and conditions would have to be invited which will then have to be opened to everybody and in these bids, existing licensees may not succeed''.

In his letter, Jagmohan had also mentioned former Prime Minister H D Deve Gowda and former Finance Minister P Chidambaram's scathing attack on his ministry as grounds for a strictregime in recovery of telecom licence fee dues of Rs 3,700 crore from private companies. A recent audit objection raised by the Public Accounts Committee (PAC) on non-recovery of licence fee dues was also brought to the PM's notice. Gowda in a letter to the PM on February 2 had accused the Government of ``not recovering dues of over Rs 5,000 crore even as these companies have been charging consumers for the services''.