For Nepal; Just Fine is in Her Fate!

-Madhab Raj Ghimire

Developing country not just has to face lack of infrastructure buildings but also has to bear burden of inefficiency of performance.  Every time, it has to face unnecessary burden of fines due to bureaucratic, political incompetence.

Let’s see the example of, three days before, news sensation and some days ago Kathmandu over bridge buildings. The unknown company is asking for compensation, after CIAA intervened constructing over head bridges. Then after, the day before yesterday, we learnt that Air Arabia asking for compensation for postpone of the flights operation from Kathmandu to Malaysian capital.  In the same time, there will be chance of looking at the incident from International court implementation of fifth freedom rights regarding international standards which was conducted agreement between both parties.  Yesterday, Sino Hydro asked compensation causing strikes and different geographical structure of the sites.

Just these couple of example are enough to understand why are corporation or development related institution turn out expensive while question comes for product cost or operation cost.  Now, Sino Hydro which has already spent remarkable amount on to West Seti Hydro project will be after compensation from the government   if there would be lack of supportive efforts from government or locals. However, its learnt that GoN is not extend the term for the project citing no remarkable progress made until the date since  company received license nearly one and half decade ago.

Why our projects get hampered while they are near about to start work of construction or operation? There are so many reasons; First, political incompetence to deal such a sector specific issues to understand for the long run operation. Adding with this, political leader’s incompetence is majorly hampering to infrastructures related projects.  Second, lack of home work, before reach to the agreement, always come to the final conclusion to do agreement with second party in haste manner.  Third, lack of effective regulatory regime and incompetence’s of implementation agency.  Fourth, despite having some of regulatory agency and unwillingness of effective implementation and monitoring to developments projects activities cost heavily to nation. Finally, ToR and MoU are key factors for any infrastructures buildings. Thus, Nepalese sector specific regulation should provide clear understanding of terms and conditions of MoU to reduce emerging disputes in future.

mrghimire@hotmail.com

Critics on Nepalese Consumer Rights activists and CIAA

Madhab Raj Ghimire, LLM- Competition Law and Economics

Without bios or certain malafied intention, I am writing this article against those activists who are acting for consumers rights in Nepal. Despite having back ground of competition law, I’m writing some comments of immature consumers’ rights activities incompetence’s. Due to their lack of professionalism and reaction made me to think upon them that whether they really committed to the consumer rights or to cover with media with their buffoonery expression.

We can take example of constructing over head bridge in different junctions in Kathmandu valley. We all know that crossing these proposed junctions are real risk for pedestrians. One who does cross the roads always needs to think that they obtained their life for a day.  My prime concern here is- if Consumers Rights Activist want to make change then they supposed to keep an eye while KMC started to process for the bid. By that task Activists could have followed procurement procedure, T/A of building infrastructures. But in an opposite, they do start protest while so-called political leader, bureaucrats put foundation stone to the site and in some place even work has gone further, then  these activists gear up  against these construction.

Now, we learnt that these construction companies are demanding compensation from the KMC, what they had made expenses while they were on operation. I’m duly might have respected Activist if they have done much in the starting to make fair proceedings of construction. We all know KMC administration, one of the worst among our municipalities.  But, Activist has done nothing while their support needed to give them pressure while consumers wanted.  But these Activists want to appear like savoir after the expenses of our revenue gone into vein of corrupt practices.

Now, our typical CIAA which has renowned making the publicity but not been able to make even one benchmarking against corrupt organizations, individuals, bureaucrats and of course so-called politicians. I doubt, if anyone knows such a case apart from Dabur Nepal. In spite of having some doubts against the Procurement Procedure Act, NAC act to buy the planes, to meet the demand of ‘Nepal Tourism Year 2011’ cannot be rejected. Also, we cannot reject the idea the total loss due to lack of the planes to NAC and the fares goes abroad. Consumers and tax payers are not convinced who is responsible for this loss? PAC or CIAA. I’m trying to make point here; if any one does to fail the proceedings than one should have effective solution too to address that particular problem. Just stagnate act, does not give consolidation to the fair proceeding. Every year, we are keep reading these news of fair procurement proceedings, in the mean time for the economic prosperity, I felt that these provision of these institutions of CIAA, PAC or Activist positions are being misused respectively just to destabilize our economy and network sectors.

Therefore, I request these institutions to act for betterness for the country having feeling with that what steps can be taken of better steps for the country. We learnt that lobbyists has some vested interest whether to make over bridges or buying planes but we need aircrafts too revive our air industry or improve life in cities. Despite learning irregularities in those factors, we need to ignore legal constraints sake of national economic efficiencies. But also, we need to make responsible for those who are putting into our networks into heavy loss due to individuals’ legal lacunae fantasy.

mrghimire@hotmail.com

Competitive Telephony in Nepal

Madhab Raj Ghimire, LLM
Sushila Subedi Ghimire, MBS

Electric telecommunication in Nepal, if it has not been adopted competitive policy, it might have seen same situation like other network sectors in Nepal, called as corporation. In modern era, if monopolist companies do not adopt effective competition within market, their fate would be like Indian state owned telecom companies which has lost vast majority share of the market and gone to heavy loss last year. It’s happened to that company first time since establishment.

There might be one time monopoly of stake holders of the telecom companies has to face tough competition in coming years like other south Asian companies are facing. However, our telephony might have to face like Indian state giant telecom Bharati Airtel. But in our situation, other competitors are also aggressively expanding their market to be close with Nepal Telecom.

We are seeing some similar situation of India’s dominant mobile operator Bharati Airtel is moving away from Indian market to Africa to expand their market in DTH. It seems that Bharati Airtel home and host business strategy is working well to them.  While Indian competition is getting tough, these dominant players are moving away from Indian market to cash in from Africa to hold the fragile market.

However, we have very different situation than Indian telephony market. Apart from some exception, our dominant player is too moving into different sector such as hydropower investment. But, it’s not that bad unless they are contributing to anti- competitive practices. Other competitors are too expanding their market strategy aggressively since last years. Therefore, this strategy can be justified on the base of competition but we cannot ignore other small market players such as United Telecom or others.

But, there is very frustrating of the spectrum used by Nepal Telecom is not upto date to compare with other operators. While other competitors are paying annual revenue as per license to the government, on the other hand dominant market player has not paid the frequency use. In the fair and competitive market it cannot be justified.  And, it is surprising, Nepal Telecom authority and Ministry of Telecommunication has not worked much to put with in revenue collection priority. The fear is while dominant market player does not pay for the spectrum use, than other competitors may face financial influence from dominant player, Nepal telecom. Thus, loosing revenue from Nepal Telecom and affecting competition cannot be considering good example for competitive telephony in Nepal.

Competition Evolution in Nepal for Open Market Economy

Madhab Raj Ghimire, LLM- Competition Law and Economics

An appellate Court of Biratnagar’s decision against transporters and truckers in eastern Nepal and finally, Supreme Court decision to quash anti competitive practice has given at least legal ensurity from judiciary side to make wider way for free and healthy competition into transport industry. To fulfill the demand of free and competitive environment, Competition Promotion and Market Protection Act has given little relief to the consumers as well as FNCCI.

An Appellate Court decision come heavily on truckers who were after odd and even number practice to freights transport to import and export the goods including basic requirement for consumers to remote areas of the country.

There is one more impractical stand taken by the Sindhuli and Kavre transport entrepreneurs and later followed their understanding to allow more than two operators in the same route. Similarly, understanding in between local chapter of FNCCI and FNNTE Khotang set up ensuring competition into transport industry.

On the other hand, there is news of LNG Gas Distributors Association, which has opposed the producers and distributers condition that distributer cannot exchange the service of gas cylinder with other brands of the products. Therefore, GDA has demanded to allow distribute to exchange any brand of cylinder to unknown company brands. The association demanded that in open market certain oligopoly is against the spirit of free market economy. Again, Association claimed that making those such stiff condition will discourage new entrants into the market and it does put barrier to new entrants to achieve the market due to dominant distribution sector. 

An Association claims regarding exchange the products for public goodness can be considered as fair. It can also be justified that access to different brands service from the distributer easily accessible to consumers. But, there will be question of security in term of so many cylinder exploded incidents into the country.

Considering both logics can be supportive to the open market segment.  But, only we need to find out whether these decision to stop cross exchange of the product  goes against the competition or not? This is crucial question to us. What we found here is, the first argument is more a less arguing for service of general interest and other hand second claim went after to meet minimum standard of competition theory. Therefore, we need to have respond and find common solution for both parts; an international and domestic transparent and competitive exercise.

Improving Nepalese Air Transport Industry

Madhab Raj Ghimire*

Recent figure shows that Nepal Airlines come into third position to feed in passengers after Qatar and Jet Airlines. Our national flag bearer is not even able to make major market share holders within domestic aviation. The reason is being battle field of different interest holders; politician, bureaucrats or unions.

I neither want to go the CAAN, NAC side nor TIA side on these detail prospectuses. We are witness that East Asian colleague, Thai Airlines reached one of world’s top airlines and which is occupying remarkable numbers of aircrafts. In an opposite, we have NAC which is still struggling to buy two air craft’s last two years. While different stake holders’ wriggling within themselves, slowly, our air transport market share to foreign land is fading away.

Suspicion aroused while NAC sent money in an advance by violating public procurement act in haste manner to buy aircrafts. Anti- corruption voices came up to confront the decision. Due to, intervention of CIAA and Public Account Committee delayed of buying two aircraft and resulted more money exit beyond country through foreign airlines companies. Therefore, CIAA could have done to allow certain conditions to NAC to perform job for once and put restriction for future. That could have been win-win situation to all. Same rule applied last time by NRB CEO’s salary issues. In this case, CEO’S salary issue handled very refined manner. In fact this step has shown maturity of leadership of NRB.

NAC entire things are happening because of lack of effective regulatory regime in the air transport sector. In transport, airlines industry can adopt full competition in market. Here, our regulatory authority is not well enough to understand these factors to bring transparency into our air transport supposed to play for the market or regulatory efficiency, but it’s not happening.

As I mentioned above, we have regulator body for Air Transport, we have seen that CAAN doing nothing to improve ground handling which is frustrating to the international to national companies too. On the other hand, recent price setting with different airlines is working against norms of competition law. This might be collusive price fixing by the companies could be under anti- competitive practice.  We learnt that the regulatory body, CIAA which is supposed to regulate pricing issues remained silent. This setting price could be considered as fair into competitive market if this price has formal authorization from regulatory body. Now, there are huge debates on so-called agent’s commission but no one pays the attention while national carrier could not able to cover prospective market.

These are problems so far for our air industry. Thus, we cannot just escape from the problem blaming others. First we need to make efficient CAAN on implementation all the decision on Air Industry. Second, NAC cannot survive constant political or unions destabilizing behaviors. It needs to be discouraged. Third, CAAN should award ground handing on the basis of free competition procurement procedure by breaking market share. Fourth, to develop cost effective price, different hubs need to verify including with geographical oddness of Jumla and etc. to reduced price to the regional air transport. Fifth, ticket bookings on early (advance) or late need to be based on business promotion which can be exempted but it should not be directed against competitors to wipe out from the market. Sixth, to bring healthy competition, there need to be introduce SGEI considering our geographical difficulties. Seventh, agent’s commission needs to be more transparent to combat variable price to the consumers. Finally, we have concern of security, International Civil Association Organization safety concern need to be address as per international standard.

Infrastructure Legal/Regulatory Consultant */ mrghimire@hotmail.com