Nepal | August 15, 2020

Independence Day 2020

Local bodies yet to receive royalty for use of natural resources

Umesh Poudel
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Kathmandu, November 28

Local bodies and provinces will have to wait for some more time to receive the royalty generated from the use of various natural resources, as the central government lacks data to distribute the funds among sub-national governments.

The central government had earlier said it would distribute royalty generated from the use of rivers, mountains, forests and mines among local bodies and provinces from this fiscal year.

Based on this decision, the National Natural Resource and Fiscal Commission (NNRFC) had devised a formula and asked the Financial Comptroller General Office (FCGO) to refer to it at the time of distributing the royalty among sub-national governments.

Since then, the FCGO has asked the Department of Tourism (DoT), Nepal Electricity Authority (NEA) and the Department of Electricity Development (DoED), the Department of Mines and Geology (DoMG), and the Department of Forests (DoF) to send the details of royalty collected from the use of mountains, rivers, mines and forests, respectively. They have already sent the data, but the FCGO has not been able to explicitly determine the amount that each local body or province will get because of incomplete information.

“The DoT, for example, has sent a bulk figure of royalty collected from use of mountains. In other words, it has not said how much royalty was collected from, say, Mt Everest or Mt Annapurna. Since mountains are located in different local bodies and provinces, we first need to know the royalty generated from every mountain in Nepal,” said Niraj KC, spokesperson for FCGO, adding, “Other bodies have also made the same mistake. This has prevented us from distributing royalty to different sub-national governments.”

The central government has said 25 per cent of the royalty collected from the use of rivers, mountains, forests and mines will go towards local bodies. Another 25 per cent of the royalty collected from these sources will be distributed among provinces, while the central government will keep the remaining 50 per cent of the royalty.

Many local bodies and provinces are pushing the central government to release the royalty that they are entitled to, as they have prepared their annual budgets based on income that they are likely to generate from the use of natural resources.

“This problem can only be solved once we get disaggregated figures from respective bodies that collect royalty,” said KC. “We have already written to DoT, NEA, DoED, DoMG, and DoF to provide data on royalty generated by each mountain, river, mine and forest, respectively. But they have not responded.”

Nabin Raj Singh, director general of DoED, pointed at the technical hurdles in the royalty collecting system after it converted into provincial system from district system. “We are hiring a consultant to iron out the issue. However, there are some difficulties in compiling the data and we will only be able to provide the details of royalty from rivers after four or five months into the new fiscal year,” Singh added.

But even if these bodies provide disaggregated data, a long-term solution needs to be worked out to make these agencies input data on royalty collection in software such as Revenue Management Information System (RMIS) every day so that the FCGO can get real-time information on a daily basis, according to KC.

Essentially, RMIS is a software solution, which allows carrying out revenue management tasks more efficiently. The software has facilitated in managing real time revenue data to the government in order to help it make more informed decisions.

Namgyal Zhangbu Sherpa, mayor of Solududhkunda Municipality of Solukhumbu district, said they had not been able to execute their development works in lack of the royalty money collected through mountaineering, forests and water resources.

“We should have received royalty money from fiscal 2017-18 onwards, but the central government said they would be unable to provide it since then citing mismanagement of their paperwork,” he said. “In the last fiscal, we received Rs 20 million, but are yet to receive any funds in ongoing fiscal.”

As per the formula, local bodies have to be provided royalty money every three months.

A version of this article appears in print on November 29, 2019 of The Himalayan Times.

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