UTL drags heels on royalty dues
KATHMANDU, APR 06 -
The royalty row between telecom regulator Nepal Telecom Authority (NTA) and the country’s first private telecom service provider United Telecom Limited (UTL) is getting bigger by the day.
UTL that owes around Rs 900 million in royalty to the government, has indicated it will not pay its royalty dues. After NTA issued a warning to scrap its operating license, UTL informed the regulator that the Indian government will hold talks with Nepal at the highest level to resolve the issue.
Sources at the Ministry of Information and Communications (MoCS) say the Indian government has verbally and in written form told the Nepal government to settle the royalty row. NTA on March 25 had dispatched a letter to UTL, asking it to clear its royalty dues within 35 days. In the letter, NTA had warned of scrapping UTL’s operating license if it failed to clear its dues.
UTL, in a letter sent to the NTA while renewing its operating license, had said the royalty issue was being discussed at the highest level between the Nepali and Indian governments. It said it was not in a position to clear its royalty dues due to huge losses and that the issue will be solved only after talks between the two governments. UTL has not paid royalty as committed to for the last five years citing losses and negative impact on its image after temporary blockage of its service during the royal regime in 2005. “UTL officials, in formal and informal talks, have been telling us that the Indian government will hold talks with the Nepal government on this issue. This shows that UTL is not keen on paying its royalty dues,” says a high-level MoCS official.
However, UTL Managing Director Madan Singh said he had no idea of any high level talks between the two countries and that the company had not taken any decision regarding the recent NTA directive. “It is a big issue. Coming up with a decision will certainly take some time. As far as high level talks are concerned, I have no idea,” said Singh.
Sources at NTA said if the government waives UTL’s royalty dues, it will set a negative example. “If the government waives UTL’s royalty dues, it will send a negative message to other operators and raise a question mark over the jurisdiction of the authority,” said a source at NTA. NTA Chairman Bhesh Raj Kanel said NTA will take action against UTL if it fails to clear its dues within the stipulated date. “If the government comes up with any decision to waive the royalty dues, it will affect the authority to better manage the telecom sector in future,” he added.
UTL, which was established in 2002, is a joint venture of three Indian telecom companies—Mahanagar Telephone Nigam Limited (26.68 percent), Telecommunications Consultants India (26.66 percent) and Tata Communications (26.66 percent)—and local partner Nepal Ventures (20 percent). Mahanagar Telephone Nigam and Telecommunications Consultants are Indian government-owned companies.
Instead of paying the royalty, UTL has been seeking Rs 4.44 billion as compensation from the government for the interruption of its services during the royal regime. However, the authority said their demand was not ‘logical’ as the then royal regime had waived Rs 189.45 million from its committed royalty fee through a Cabinet decision on March 9, 2006. UTL has so far paid Rs 160.57 million in royalty to the government over the last eight years, based on the condition of the 4 percent arrangement. As per the law, telecom operators have to pay the royalty amount whichever is higher among the committed royalty fee while obtaining the license or 4 percent of the total annual income.
Source: Kantipur
The royalty row between telecom regulator Nepal Telecom Authority (NTA) and the country’s first private telecom service provider United Telecom Limited (UTL) is getting bigger by the day.
UTL that owes around Rs 900 million in royalty to the government, has indicated it will not pay its royalty dues. After NTA issued a warning to scrap its operating license, UTL informed the regulator that the Indian government will hold talks with Nepal at the highest level to resolve the issue.
Sources at the Ministry of Information and Communications (MoCS) say the Indian government has verbally and in written form told the Nepal government to settle the royalty row. NTA on March 25 had dispatched a letter to UTL, asking it to clear its royalty dues within 35 days. In the letter, NTA had warned of scrapping UTL’s operating license if it failed to clear its dues.
UTL, in a letter sent to the NTA while renewing its operating license, had said the royalty issue was being discussed at the highest level between the Nepali and Indian governments. It said it was not in a position to clear its royalty dues due to huge losses and that the issue will be solved only after talks between the two governments. UTL has not paid royalty as committed to for the last five years citing losses and negative impact on its image after temporary blockage of its service during the royal regime in 2005. “UTL officials, in formal and informal talks, have been telling us that the Indian government will hold talks with the Nepal government on this issue. This shows that UTL is not keen on paying its royalty dues,” says a high-level MoCS official.
However, UTL Managing Director Madan Singh said he had no idea of any high level talks between the two countries and that the company had not taken any decision regarding the recent NTA directive. “It is a big issue. Coming up with a decision will certainly take some time. As far as high level talks are concerned, I have no idea,” said Singh.
Sources at NTA said if the government waives UTL’s royalty dues, it will set a negative example. “If the government waives UTL’s royalty dues, it will send a negative message to other operators and raise a question mark over the jurisdiction of the authority,” said a source at NTA. NTA Chairman Bhesh Raj Kanel said NTA will take action against UTL if it fails to clear its dues within the stipulated date. “If the government comes up with any decision to waive the royalty dues, it will affect the authority to better manage the telecom sector in future,” he added.
UTL, which was established in 2002, is a joint venture of three Indian telecom companies—Mahanagar Telephone Nigam Limited (26.68 percent), Telecommunications Consultants India (26.66 percent) and Tata Communications (26.66 percent)—and local partner Nepal Ventures (20 percent). Mahanagar Telephone Nigam and Telecommunications Consultants are Indian government-owned companies.
Instead of paying the royalty, UTL has been seeking Rs 4.44 billion as compensation from the government for the interruption of its services during the royal regime. However, the authority said their demand was not ‘logical’ as the then royal regime had waived Rs 189.45 million from its committed royalty fee through a Cabinet decision on March 9, 2006. UTL has so far paid Rs 160.57 million in royalty to the government over the last eight years, based on the condition of the 4 percent arrangement. As per the law, telecom operators have to pay the royalty amount whichever is higher among the committed royalty fee while obtaining the license or 4 percent of the total annual income.
Source: Kantipur
