Consumer rights

Regulators submit to interest groups, hampering service delivery in multiple sectors


When the Nepal Telecommunications Authority (NTA), the country’s telecommunications regulator, wanted to allow a new mobile service provider to enter the market, the Nepal Telecommunication Corporation (now Nepal Telecom or NT) was reluctant. But, after some time, the Nepal Telecommunication Corporation only facilitated the entry of another player into the market after forming a new service department in this framework. Such a struggle between regulators and service providers has been going on for ages, affecting consumers every day.

Regulators regulators

A prime example is a recent dispute between the Nepal Electricity Authority and Internet service providers, as a result of which consumers who have paid for the Internet continue to suffer. The NEA cut the wires to the ISPs claiming they did not pay the rent for using the utility poles.

The crackdown, however, did not last long as the ISPs became more powerful than the NEA. Other than that, the NTA has also not been able to take action against ISPs who have taken money from consumers but refuse to pay the NEA.

Economist Chandra Mani Adhikari believes that in Nepal, service providers have a lot of power over regulators. Since most regulatory bodies were created after the establishment of service providers, many lack the courage to do anything. There is sufficient evidence that these regulators have failed to oversee service providers.

“Service providers have dominated regulators for a long time. It’s bad enough for consumers and the country in general, ”says Adhikari.

Former secretary Sharada Prasad Trital believes that there is an abnormal proximity between service providers and regulators. He believes there are times when regulators even bow to service providers, which he says is not good.

Trital also accuses regulators of making rules that benefit service providers or interest groups associated with service providers. He also adds that they have pardoned these service providers and helped them when needed.

“Interest groups have paid a lot of money to those in power and running these regulatory bodies. They will always work to their advantage and not care about consumers, ”says Trital.

Examples galore

File: Beema Samiti, Insurance Council of Nepal

He is right. There are many examples of regulatory bodies breaking the law to work for the benefit of service providers.

As the world battled Covid-19 in March 2020, Nepalese insurance companies adopted a policy that they would insure people against coronavirus infection. There was a plan to insure people up to 100,000 rupees. But, as the number of Covid-19 cases began to rise, insurance companies canceled the policy. Citing that too many people had been infected, they said they couldn’t pay everyone.

About 114,000 people are still trying to get money from these insurance companies. If the estimated data is correct, insurance companies in Nepal owe people over Rs 10 billion.

Meanwhile, Beema Samiti, the regulatory body, remains inactive. Adhikari believes that the decision to allow insurance companies to sell the Covid-19 insurance policy, and then to sit idle when they don’t pay consumers, is up to the Beema Samiti, due to which people have stopped to believe in insurance companies.

But, Nirmal Adhikari, chief information officer of Beema Samiti, said the matter was being examined in the courts, adding that people would get their money if the government gave money to insurance companies for pay people.

If you think Beema Samiti is bad, wait until you hear about the Securities Board of Nepal (SEBON), Nepal’s capital market regulator. According to its law, insider trading and misappropriation of shares are illegal. But, SEBON has yet to take action against anyone who has been involved in insider trading or misappropriation of shares.

On the contrary, SEBON officials have been implicated in these activities since its chairman Bhishma Raj Dhungana was sacked by the government following allegations of insider trading. With people like Dhungana and others involved in manipulating the market, the only ones to suffer are regular investors.

Now back to the NTA… If the NTA had made an effort to force service providers to follow its rules, the cost per minute of calls from one network to another would be Rs 0.44 cheaper than the current rate. .

On April 2, 2020, the NTA released the Nepal Interconnection Directive which stated that the cost per minute of a phone call would be set at Rs 0.10. But the service providers ignored it and charged what they wanted. The NTA has just sent warnings to these service providers, but experts believe this is just a formality.

If the decisions made by the regulators were upheld, things would be quite different. But, because of the political appointments that run them, they don’t do much.

On April 1, 2015, the Ministry of the Environment banned the distribution, production and import of single-use plastics less than 40 microns thick. But, this ban was not effective at all. A similar decision was made in July, but as in 2015, people still use these plastics as producers pressured the government not to take any action against its use. The influence of producers is so strong that they even forced the ministry to change the wording of its directive and make it vague enough to continue producing and distributing plastic bags.

Consumers pay the price

Every day Nepalese are deceived by various service providers. But, since regulators don’t do much, there’s nothing they can do but complain. The people who complain the most are the users of public vehicles, as they are the ones who are regularly cheated by service providers.

Bagmati Province has increased the price of the trip to Rs 18 (5 km), 23 (10 km) and Rs 27 (15 km). But, citing the lack of change, the bus operators charged people Rs 20, Rs 25 and Rs 30 respectively.

Taxis have been deceiving people for years by refusing to turn on their meters. Regulators responsible for both public buses and taxis, like the Department of Transportation Management, Traffic Police, and the Department of Commerce, have turned a blind eye to all of this as they let the transport contractors do it. what they want.

Nepal Civil Aviation Authority is also in the same category. Last week, an NAC plane scheduled to fly to Rukum landed in Nepalgunj because the pilot flying the plane had exceeded the number of hours it could fly. CAAN did not warn the CNA to repeat this incident because it did not act strictly. A similar incident was reported in 2021 when a Summit Air pilot logged more than 12 flight hours. CAAN was already a mother at the time.

Another government agency that just doesn’t care about consumers is the Ministry of Commerce, Supply and Consumer Protection. Mentioning that he received no complaints, he turned a blind eye to companies doing whatever they wanted.

In January 2020, poultry companies destroyed 3 million chicks and 35 million eggs due to oversupply. But, within days of that, the price of chicks and eggs skyrocketed. At that time, the department did nothing other than send out warnings. No action was taken against anyone.

The department also did nothing when the price of cooking oil rose in October 2020. It was strange that the price of oil rose as the raw material for the oil was brought into the country in duty free. But, the ministry, having known it, did nothing.

Consumer rights activist Madhav Timilsina has said that the way companies are allowed to charge what they want into regulators is quite daunting.

“The only people this system favors are intermediaries and businessmen. Local producers and consumers should feel cheated, ”says Timilsina.

Human rights activist Jyoti Baniya says that companies’ pricing of items is grossly wrong, as it will create a monopoly in the market.

“The law gives regulators the right to jail people for up to 10 years. But, the Ministry of Commerce is not taking any action, ”he said.

Escape for lack of laws

It is quite obvious that regulators are unable to impose their authority on service providers or businesses. But, there is another problem they face – a lack of laws and policies. Although the NEA claims the load shedding is over, consumers still face regular power outages that occur without notice or warning. Meanwhile, the Electricity Regulatory Commission is a silent spectator.

If the commission was serious in its work, the NEA should have explained and / or faced action. The government even drafted the Electricity Regulatory Commission Act, but it has yet to establish rules and guidelines on how to take action against bodies like the NEA.

Endemic conflicts of interest

Experts say the main reason regulators don’t work well is a lack of capacity and honesty. Economist Adhikari claims that the only decent regulator in the country is the Nepal Rastra Bank. This, he says, is only due to knowledgeable and experienced staff.

Former NRB executive director Gopal Bhatta says decisions by regulators are based on who makes them.

“We have to be transparent and honest. We must rise above personal agendas and work for the good of the body we serve. If we don’t, the regulators won’t make sense, ”Bhatta says. “Unfortunately, people here don’t think so and have worked despite a conflict of interest.”

Former head of CIAA, Nepal’s anti-corruption body, Surya Nath Upadhayay, says poor regulation is because the government rarely appoints capable people but chooses people it feels comfortable with. ‘easy.

He adds that with organizations like the CIAA and the Office of the Auditor General not functioning to their full potential, regulators have leeway.

He says it is high time the government stopped appointing people in conflict of interest when it called for appointments based on their abilities.

“If we are able to clean up the authorities, we can change the country,” Upadhayay says.