PAC unconvinced by NTA’s explanation for issuing permit

- SANJEEV GIRI, Kathmandu

May 23, 2017-

The parliamentary Public Accounts Committee (PAC) has expressed serious reservations over the clarification given by the Nepal Telecommunications Authority (NTA) for issuing a 4G licence to Ncell despite its objections.

The House panel had forbidden the NTA from granting the permit until Ncell’s capital gains tax issue was settled, but it went ahead after getting the green light from the parliamentary Development Committee.

When the PAC asked for an explanation, the NTA furnished an ambiguous response. The telecommunications sector regulator said that it hadn’t allowed Ncell to use additional frequency for rolling out 4G service in line with the PAC’s directive issued on January 23. 

However, the NTA has stated that it has allowed Ncell to operate 4G service from June 1 in the existing frequency of 900 MHz and 1800 MHz under the provision of technology neutral spectrum. The provision of technology neutrality is incorporated in the Frequency Policy 2016, and it allows service providers to launch or implement any technology or services in the existing frequency band. 

The NTA has cited the Development Committee’s directive issued on April 26 which instructs it to clear off issues that have been preventing Ncell from launching 4G service. The committee chaired by CPN-UML leader Rabindra Adhikari had argued that barring Ncell from launching new technology would have a negative impact on consumers, the state coffers and foreign investment. 

“We didn’t find the NTA’s answer convincing. The letter has stated that the NTA has respected the directives of both House committees. However, it has allowed Ncell to roll out 4G service, and that violates our order,” Surendra Aryal, under secretary at the PAC secretariat, told the Post. “We will call for a meeting and take a strong position on the matter.” The directive of the Development Committee had been kept under wraps. It came to light after Kantipur daily ran a story on April 30. Based on the news report, the PAC on May 5 asked the NTA to furnish a clarification within two days. 

The move, according to some PAC lawmakers, had been perfectly timed as the first phase of local elections was scheduled for May 14 which ensured that the PAC wouldn’t be able to look into the matter immediately.  

With the second phase of local elections scheduled for June 14 and a majority of lawmakers occupied with the polls, a PAC meeting seems unlikely to be held within the near future, giving Ncell an opportunity to launch 4G service. 

The PAC has 51 members and it needs 13 members to form a quorum. “There won’t be problem to form a quorum. But we have taken this issue seriously, and do not want to hold a meeting with few participants,” Aryal said, adding that the possibility of holding a meeting before the elections could not be ruled out. 

The constituencies of prominent PAC lawmakers like Bishnu Poudel, Gyanendra Bahadur Karki and Ram Hari Khatiwada along with PAC Chairman Dor Prasad Upadhyay will be holding elections in the second phase, which has added to the workload of lawmakers.

The PAC had directed the Ministry of Information and Communications (MoIC) and the NTA not to allow Ncell to introduce 4G and other services until its tax issue was resolved as it is of the view that service providers need to obtain a tax clearance certificate before obtaining government approval to expand services. 

In the biggest corporate buyout deal in Nepal, Swedish telecom giant TeliaSonera sold its stake in Ncell to Malaysian company Axiata for $1.03 billion in 2015. The government has clearly said that 25 percent of the profit made from the sale of Ncell should be deposited as capital gains tax. Ever since the deal took place, the government has been saying that tax would be levied on the transaction, but it has not mentioned the amount. 

Following pressure from the government, Ncell has so far deposited Rs9.97 billion as 15 percent withholding tax, or tax deductible at source for capital gains. The payment of this tax amount means the seller earned Rs66.46 billion by divesting its shares in the telecom company. This tax amount had been calculated by Ncell itself. Meanwhile, the Large Taxpayers’ Office (LTO), which is supposed to clarify the government’s position on Ncell’s capital gains tax, is assessing the issue and is likely to reach a conclusion soon. 

Published: 23-05-2017 08:19

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