Royalty has UTL over a barrel
The royalty payment issue between the regulator—Nepal Telecommunica-tions Authority (NTA) and United Telecom Limited (UTL)—refuses to die down. NTA has nixed UTL’s request to withdraw action against it. The regulator on Monday said that action against UTL would be taken if it fails to clear royalty dues within set deadline.
UTL had sent a written reply to the regulator after NTA on March 25 gave a 35-day deadline to it clear the royalty dues. In view of nearing deadline, UTL had requested NTA to take back its decision to scrap operating license on the failure to clear dues citing that there was a government to government level talk going on the issue.
A source at the Ministry of Foreign Affairs said that India will raise UTL’s royalty issue during its Foreign Minister SM Krishna’s upcoming Nepal visit. Krishna is arriving on Wednesday. The source also said that Chief Secretary Madhav Ghimire had held a meeting with joint secretaries of Ministry of Foreign Affairs, Ministry of Information and Communications, Ministry of Finance and chairman of the NTA on the issue of the UTL’s royalty on Sunday.
UTL—the first private sector telecom operator owes over Rs 900 million royalty dues. “UTL in its letter had requested for withdrawing the decision and wait for the outcome of the ongoing talks between high level officials of both countries,” said Bhesh Raj Kanel, chairman of NTA. “However, we have told UTL that there would be no change in the decision of the NTA.”
The regulator on March 25 following a NTA board decision had dispatched a letter to UTL to clear its committed royalty dues within 35 days. It had also warned of scrapping the UTL’s operating license if it failed to clear its dues.
A high level official at the NTA said that the UTL’s plea to withdraw decision on royalty issue was not logical. “If the government directs us, we can hold or withdraw the decision,” added the official.
Even if the government asks the NTA to hold, withdraw or waive royalty dues of UTL, NTA officials say it would send a negative message to the telecom sector. “As our decision is based on license conditions and extensive study, any waiver to UTL would weaken regulators’ jurisdiction,” said the official.
In the letter sent to NTA, UTL had also showed reasons of foreign investment, generation of employment in the local market and loss in business during the royal regime. Earlier, it had also sought compensation worth Rs 4.44 billion for losses in business and damage to brand image.
The official said the regulator will take action if UTL fails to clear its committed royalty within the given timeframe. The official added that UTL did not pay a penalty of Rs 500,000 owed to NTA. Established in 2002, UTL is a joint venture by three Indian telecom companies, Mahanagar Telephone Nigam (26.68 percent), Telecommunications Consultants India (26.66 percent) and Tata Communications (26.66 percent) and local partner Nepal Venture (20 percent).
When UTL was granted license to operate basic telecom service in the country, it had committed to pay Rs 1.24 billion royalty for eight years (2002-03 to 2009-10). Of the committed amount, it has so far paid Rs 160.57 million and Rs 189.45 million was waived by the then royal regime in 2005.
As per license conditions, telecom operators have to pay royalty, whichever is higher among the committed royalty fee while obtaining the license or four percent of the total annual income. Officials at NTA said that the amount of royalty dues of UTL would rise to more than Rs 1 billion as the latter has been paying only four percent of total income for two services—basic telecom and limited mobility service.
Posted on: 2011-04-19 09:48
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