MoIC pushes for UTL's royalty waiver

KATHMANDU, Feb 16: The Ministry of Information and Communications (MoIC) has written a request letter to the Ministry of Finance (MoF) for waiver of United Telecom Limited´s (UTL) outstanding royalty that stands at around Rs 1 billion.



A finance ministry official told Republica that the ministry received the letter last week.[break]



“The letter was written after Ministry of Foreign Affairs (MoFA) requested MoIC to resolve the long-standing dispute between the telecom operator and regulator by taking decision in favor of the operator,” the official added.



MoIC´s request comes around a month after Nepal Telecommunication Authority (NTA) - the telecom sector regulator -- decided to close down some services of UTL for not complying with the law and requested the parent ministry to coordinate with the home ministry for taking action against the Indian joint venture.



NTA was awaiting MoIC´s green signal to block UTL´s basic services that include wireless fixed line, lease line, STD and ILD gateway.



Sources said MoFA pushed for royalty waiver mainly due to intense pressure from Indian diplomats. India has been raising the issue of UTL in almost all bilateral trade and other talks since 2006. It was also pushing for the waiver even at the political level as well.



Former PM Jhalanath Khanal on July, 2010 had instructed Chief Secretary Madhav Prasad Ghimire and then MoIC secretary Shreedhar Gautam to resolve the royalty issue at earliest and had also enquired about the possibility of waiving off the outstanding royalty.



UTL has been pushing for royalty waiver, stating that restrictions on operators imposed during former king Gyanendra Shah´s direct rule in 2005 had inflicted huge loss on it. The government has already waived off royalty amounting to Rs 190 million for the period.



However, UTL royalty waiver for that period alone would not suffice because it has not been able to operate freely due to lack of support of the NTA. It has even sought compensation, stating that it has incurred loss of Rs 4.4 billion due to lack of committed support from the regulator.



Going by existing Telecommunication Act, telecom operators need to pay committed royalty fee or four percent of the total annual income, whichever is higher, as royalty fee.



According to NTA, UTL has so far paid just Rs 160 million, which is equal to 4 percent of the total annual income, whereas going by its committed royalty fee it should have paid around Rs 1 billion.

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