Provincial and Local Governments to get Telecom Royalty Fees

From now on Provincial and local governments will be entitled to a share of telecom royalty fees. The National Natural Resources and Fiscal Commission (NNRFC) has urged the federal government to allocate a portion of royalty among the lower-tier governments after treating telecom frequencies as natural resources.

The NNRFC is a constitutional commission that concerns mobilizing natural resources among the three governments. It reasoned those frequencies used in the telecom industry are natural resources referencing the Intergovernmental Fiscal Arrangement Act 2074. On this basis, the commission has directed the government to share the revenues coming from operators in frequency charges.

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Provincial and local governments to claim a share of telecom royalty revenues

Following the commission’s directive, the revenue coming from telecom royalty will now be split among all the three-tier governments.

As per the decision, the Federal government will claim 50% of the total royalty fee. The provincial and local levels will claim 25% each.

Governments	Telecom royalty share
Federal government	50%
Provincial government	25%
Local-level government	25%

The telecommunications Act 2053 stipulates that operators contribute 4% in royalty to the federal government annually. So far, only the federal government has received such revenue which now will undergo a policy shift.

Meanwhile, the government receives a hefty sum in royalties from service providers each fiscal year. The NTA report shows that in the last FY 078/79, 82 service providers filed a total of over Rs 3.53 billion in royalty to the government. Nepal Telecom, Ncell, and WorldLink were among the top contributors with the highest sum. With the existing law, only the central government claimed the fees.

The commission director Balanand Poudel says the government has been given necessary instructions regarding royalty allocation.

“The Intergovernmental Fiscal Arrangement Act considers five different sources to be a natural resource,” he said, adding that “it now also covers telecommunications services.”

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Telecom service as a ‘natural resource’

“We have considered telecommunications services as natural resources, suspending Supreme Court orders, international court orders, and international recognition,” Poudel added.

The provision has come into effect from Shrawan 1, the start of FY 079/80. However, the commission chief shared that it is yet to calculate the final ‘equation’. The matter will get a collective resolve after a discussion among MoCIT, Finance Ministry, and NTA.

communication service providers pay various fees to the government including RTDF, license renewal, and frequencies among others. But the commission has only decided on sharing royalty among provincial and local governments.