In a significant call for reform, stakeholders have emphasized the need for an equitable distribution of royalties generated from telecommunication frequency usage, urging that the funds be shared fairly with provincial and local governments.
Speaking at an event organized by the Society of Economic Journalists-Nepal (SEJON) on Monday, March 3, they argued that, as telecommunication frequencies are a natural resource, the royalties they generate should be allocated justly, benefiting regions that are impacted by their use.
Juddha Gurung, a member of the National Natural Resources and Fiscal Commission, highlighted that a recommendation had already been made to the Ministry of Finance to establish a divisible fund for the fair distribution of these royalties. Despite this, he pointed out that, since the commission’s recommendation on June 22, 2022, the ministry has yet to take any action.
“International experiences and Nepal’s policy frameworks are clear in recognizing telecommunication royalties as revenue derived from natural resources,” said Gurung. “Based on our studies, we concluded that the same applies in Nepal, and thus recommended that the ministry allocate these funds to the relevant authorities.”
Engineers Khimananda Kandel and Bhuwan Poudel, who contributed to the study for the commission, reinforced the view that telecommunication frequencies qualify as a natural resource.
“Article 69, Clause 4 of the Constitution, alongside Schedules 6 and 9, and the Intergovernmental Fiscal Management Act, 2017, all define telecommunication royalties as revenue from natural resources,” Kandel explained. “This classification was further supported by a Supreme Court ruling in 2070 BS.”
Poudel expanded on the issue, explaining that telecommunication frequencies, which occur naturally, play a crucial role in wireless communications such as radio, television, X-rays, telephones, and mobile networks. “Though various sectors utilize radio frequencies, telecommunications generate the highest revenue from their use,” he said.
Prof. Dr. Shivraj Adhikari, Vice Chairman of the National Planning Commission, pointed out that clarity is needed on whether the royalty distribution should be regarded as profit-sharing or compensation. He drew comparisons with royalties from mining and hydropower projects, stressing the need to assess the broader impact of radio frequencies across different sectors. “Before distributing telecommunication royalties, we must carefully evaluate how radio frequencies affect different industries,” Adhikari noted.
Similarly, Commission Secretary Kiran Raj Sharma underscored that the commission has recommended a distribution framework based on the environmental impact, conservation efforts, and utilization of radio frequencies. “Policy frameworks clearly mandate the equitable distribution of natural resources,” Sharma said. “We have proposed that the royalties be allocated according to geographic area, population, and mobile user statistics.”
The commission’s proposed distribution model suggests allocating 30% of the royalties based on geographic area, 25% based on population, 15% based on mobile users, and 30% according to the number of Base Transceiver Stations (BTS) in a given area.
Currently, the Nepal Telecommunications Authority (NTA) collects approximately Rs 3.5 billion in royalties annually, with 90% of the total revenue being generated by Ncell and Nepal Telecom. The debate surrounding the equitable distribution of these funds continues to gain momentum, with stakeholders calling for the government to take immediate action to implement the proposed recommendations and ensure fair allocation of these resources to benefit local and provincial communities across Nepal.
