Nepal Telecom owes billions in royalty

KATHMANDU:

The government has not been able to collect Rs 3.27 billion royalty that Nepal Telecom had committed to pay. Neither Nepal Telecommunications Authority nor the Ministry of Information and Communications seem serious to recover the dues, which will directly go to the government coffers.

The outstanding revenue is the royalty which NT had agreed to pay while obtaining the licence to operate cellular mobile service in the country 15 years ago.

Going by the government provision, NT and two private sector companies — Ncell and United Telecom Ltd — are responsible to pay the committed royalty each year during the first 10 years of service operation. Both NT and Ncell were required to pay Rs 3.90 billion each as royalty. The state-owned company did pay Rs 635 million in the first 10 years under a separate provision of four per cent of annual income as royalty. But it is yet to clear the remaining dues for fiscal years 1998-99 to 2007-08.

The state-owned telecom service provider has been claiming that it is not required to pay the committed royalty like other companies that entered the market through competition. “From a legal point of view, we do not have to pay this revenue and NTA has also been informed about this,” said Budhi Acharya, managing director of NT.

But NTA said NT had to pay the dues as agreed earlier. Initially, NTA failed to pressure NT after Ncell moved the Supreme Court against the committed royalty provision. However, in 2012 Ncell lost the case. “NT is reluctant to clear the dues despite many instructions from us,” said an official at NTA, seeking anonymity.

The official said since MoIC is the line ministry, it had to direct NT to pay the revenue, as the secretary of MoIC is also chairman of NT board. Sushil Ojha, joint secretary at MoIC and a member of NT board, said, “Being the regulator, it is the duty of NTA to collect the committed royalty, if there is any.”

Ncell, after losing the case, cleared its committed royalty by paying its last installment of one billion rupees to the government this year.

Each year many companies don’t clear royalty on time and despite a provision in Telecommunications Act to impose a fine of Rs 50,000 on those who fail to uphold NTA’s instruction and Rs 5 lakhs for not obeying rules mentioned in the licence, NTA hasn’t been strict with its licencees, said the official.

Source: THT