Nepal | June 20, 2019

Nepal Telecom doesn’t care two pins for local industries

• Indulging in anti-national, discriminatory purchase policy • Wasting foreign exchange by favouring overseas vendors

Himalayan News Service

KATHMANDU, July 23

At a time when the country is reeling under the crippling economic after-effects of April’s devastating earthquake, Nepal Telecom is actively working against the interests of the local industries and wasting valuable foreign exchange by ordering goods from abroad.

The state-owned telecom company has been discriminating against local companies while ordering goods and equipment. This is despite the fact that several governmental bodies, including the Nepal Telecom Authority, have issued specific directives to all telecom companies to use local products in order to develop local industries and also save valuable foreign exchange. Ironically, despite this issue being highlighted by national newspapers in the last few days, the NTC management has chosen to go ahead with its decision.

The latest instance of such discrimination is the global tender notice issued by Nepal Telecom on March 26 for the supply of Recharge Cards Vouchers. The notice, which is in direct violation of the NTA directive on localisation, seeks bids from global companies for supply of RCVs while excluding two local companies that have set up production facilities within Nepal at a huge cost of $5 million. One of these companies, set up three years ago, has been supplying high quality RCVs produced at its state-of-art factory to Nepal Telecom and other telecom companies for the last two years without any hitch.

According to Manohar Ghimire, Corporate Director of Mirage Security Printers, apart from his own company, there is yet another entity, currently operating in Nepal. “These two companies are capable of printing high-quality RCVs measuring to international standards. They have invested heavily in modern state-of-art equipment from Europe,” he said, adding that the two factories were unable to use their full capacity in the absence of adequate orders from NT.

According to him, NT has already awarded Mirage with quality vendor’s certificate after due process, including inspection of the facility. Whereas, the first company has been supplying high quality RCVs to NT for the last two years. He also claimed that the two companies were capable of printing and supplying cards as needed by NT at a much cheaper rate than the international vendors. “An Indian company had earlier been awarded to print RCVs for 64 Paisa per pin while it costs just 42 Paisa/pin here,” he said, adding that the NT board decided to exclude the two local companies from the international tender and instead chose to come out with a local tender specifically for them albeit for half the quantity it requires for the current fiscal.

When contacted Shyam Sundar Pandit, lead investigator at the National Vigilance Centre, which functions under the Office of the Prime Minister, described NT’s action as a deliberate conspiracy aimed at squandering large amounts of foreign exchange.

“How can a state-owned authority be allowed to violate its own regulation which clearly states that it must give priority to the domestic firms if more than one printing company exists within the country,” he questioned, adding that NT’s act of setting aside 50 per cent of quantity for local industry was highly discriminatory.

The NVC investigator also claimed that there were numerous evidences of foul play by the NT management. “Apart from flouting its own regulation, the NT management grossly violated the Public Procurement guidelines by ignoring the existence of two companies within Nepal and opting for global tender for RCVs.”

NTA Chairman Digambar Jha said there was a need to give first priority to local companies, including new entrants, rather than enforcing any stringent specification against them to participate in the bidding process. “Such tough criteria only promote foreign firms but clearly obstruct the growth of local vendors, specially the newcomers,” he added.

Sources in NT say the top management of the public sector unit is under tremendous pressure from local agents of international companies, mainly those from neighbouring India. They pointed out that commissions doled out on every such deal struck by the agents made it very lucrative for top officials of the state-owned telecom company.

“The huge kickbacks is the only reason for Nepal Telecom to ignore the local companies, both of which have enough production capacity to meet the RCVs demand of all telecom companies, including Nepal Telecom,” they said.

Even as the controversy over preference being given to international companies persists, the Commission for the Investigation of Abuse of Authority and NVC issued separate formal directives to NT management to not exclude local companies from the bidding process. “The CIAA directive issued two years ago specifically directs NT to create a conducive environment for including local industry to participate in all its tenders,” the sources pointed out, adding that NT management conveniently chose to ignore this directive and again came out with the global tender with specific restrictive clauses prohibiting Nepali companies from participating.

Several attempts to contact NTC Managing Director Buddhi Prasad Acharya failed as he did not respond to calls and text messages.


A version of this article appears in print on July 24, 2015 of The Himalayan Times.


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