NTA removes provision of ‘government ownership’ from Telecommunications Act

Published On: September 27, 2023 04:15 PM NPT By: Tapendra Karki

Draft of Bill to amend Telecommunications Act sent to MoCIT

KATHMANDU, Sept 27: Nepal Telecommunication Authority (NTA) has removed the provision ‘private sector telecommunication companies will come under the ownership of the Government of Nepal after 25 years' from the bill made to amend the Telecommunications Act. This draft has been sent back to the Ministry of Communication and Information Technology (MoCIT) with the aim of benefiting private-sector telecommunications service providers.

In the draft to amend the Telecommunications Act, 1997 (2053), the NTA has sought to cancel the current 25-year license period and give it an indefinite period of time so that it will not be canceled until it is renewed. The NTA had removed that provision in the draft prepared earlier for amendment.

The government has raised concerns as to what to do if the company runs away within 24 years while keeping a 25-year provision. That is why priority has been given to the deadline for renewal," said MoCIT Spokesperson Netra Prasad Subedi. The draft retains the licenses of private sector service providers until they are renewed. According to Spokesperson Subedi, internal discussions have not begun in the MoCIT. He claims that the provision of ownership of the government will not be removed during the internal discussion. "The draft has been submitted by the NTA, and until discussions take place, many aspects of this matter remain open for debate,” he said.

After the discussion in the MoCIT, the draft will proceed to the Cabinet with the consent of the Ministry of Finance and Ministry of Law, Justice and Parliamentary Affairs. After approval by the Council of Ministers, it will be submitted to parliament. Looking at the situation so far, it appears the NTA intends to amend the law in favor of the private companies that possess licenses but do not offer mobile services.

Furthermore, the draft includes a reduction of the mobile service license fee, which was previously set at Rs 357 million, down to Rs 10 million. The draft appears to be designed to cause significant financial losses to the state.

According to the regulations made in accordance with the Telecommunication Act 1997, the license renewal fee in the first 10 years is Rs 20.13 billion, with the need for renewal every five years. Instead of that arrangement, in the draft, it has been arranged that for the first five years from the date of obtaining the license, Rs 10 million or eight percent of the total income earned in that year, whichever is higher, should be paid as a fee.

Another proposal has been made to pay Rs 2 billion every year after 10 years of obtaining the license or eight percent of the total income earned in that year, whichever is higher.

According to the 25-year provisions mentioned in the Telecommunications Act 1977, if the proposed draft goes to the Council of Ministers or is passed by parliament, it could provide relief to private sector companies. This bill is going to be introduced before the service period of some companies, which are about to reach 25 years of establishment.