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After a week of presenting the federal budget for the next fiscal year 2023/24, Dr. Prakash Saran Mahat finds himself surrounded by questions over the alleged involvement of an outsider in the budget-making process. On Tuesday, the House of Representatives (HoR) got rocked by the lawmakers of opposition parties who claimed that an individual who was not related to the process was involved in changing the tax rates during the finalization of the budget draft on the eve of the budget speech on May 29. The lawmakers of CPN-UML, Rastriya Swatantra Party, Rastriya Prajatantra Party, as well as the ruling Nepali Congress, questioned the government and Finance Minister Dr. Mahat over the involvement of an unauthorized person (retired staff of the Finance Ministry) in changing tax rates as well as increment in tax on electric vehicles (EVs). They also demanded a parliamentary probe over the matter. The meeting of HoR began three hours late of schedule and once the meeting convened, opposition lawmakers protested over the 'violation' of budget formulation rules. They questioned how an unauthorized person had access to a confidential chamber in the Ministry during the budget drafting process. The UML Chief Whip Padam Giri sought a reply from the finance minister, saying that the changes in tax rates in the budget have come at the behest of certain corporate groups. Rastriya Swatantra Party lawmaker Dr. Swarnim Wagle underscored the need of breaking the nexus of policy corruption. He reminded the House that the then Finance Minister had to resign upon facing the same kind of charge in the change of tax rates last year. "Has the tax rate been subverted in a conspiratorial manner to benefit certain business houses?", Dr. Wagle asked the finance minister, "We need an answer as to whether the methods and procedures have been duly followed in the work related to the HS code." Last year, the then Finance Minister Janardan Sharma was forced to resign after allegations that he allowed two unauthorized persons to change tax rates, a day before he presented the national budget in Parliament. The tax rate is generally finalized on the last day of budget making, in the meeting attended by the Finance Ministry, Finance Secretary, Director General of the Internal Revenue Department, and Director General of the Customs Department only. Responding to the lawmakers, Finance Minister Dr. Mahat said that there was no involvement of an outsider in changing the tax rates during the preparation of the budget. After lawmakers questioned him citing media reports of a former employee of the Finance Ministry involved in changing the tax rates, Mahat claimed that no unauthorized person has access to change the tax rate. "The same person, who has been typing the Harmonization Code (HS) in the tax rates since the past, was involved in this budget," said Mahat. "Retired non-gazetted first-class staffer Ram Krishna Shrestha was appointed before I became the finance minister," said Mahat, "His job was to make entries in HS Codes following the orders of the officials involved in the decision-making process. He has made entries as dictated by the officials who were present in the decision-making process." Speaking to the media, Shrestha, a former staff of the Department of Customs, has said that he has worked as a typist during the preparation of the budget for many years. Lawmakers also questioned the finance minister over the alleged leakage of information on the tax structure of EVs. The federal budget for FY 2023/24 has increased the tax on EVs of 50-100 KW motor capacity while lowering the tax on EVs above 100 KW. And, anticipating the government move, EV dealers were quick to import over 1,000 EVs of 100 KW capacity just ahead of the budget presentation. According to officials at the Department of Customs, the majority of EVs imported in the last two weeks are 100 KW EVs. While the current fiscal year budget favored EVs up to 100 KW, the new budget has supported EVs above 100 KW that are considered expensive in the market. The new budget has imposed a 5 percent customs duty and 10 percent excise duty on electric vehicles of 50-100 KW, while it reduced the customs duty and excise duty on electric vehicles of 100-200 KW. Similarly, the customs duty has been reduced by only 5 percent for EVs having 200-300 KW capacity. Ahead of the new budget, the EV dealers (a group of importers who sell EVs up to 100 KW) strongly lobbied with the government urging the Finance Ministry not to change the tax structure. Another group of dealers selling above 100 KW EVs and fuel engine vehicles asked for increasing tax on EVs up to 100 KW.

“Ropeways can be a vital means of goods-transport in a country like Nepal with its rugged terrains and ever-present risks of roads being blocked by water-induced disasters,” says Victoria Hilda Rigby Delmon, Manager, INR Asia Upstream and Advisory-IFC. “Compared to air and road transport, ropeway transport is cheaper too.”

The importance of ropeways for Nepal had become evident even a century ago: construction on the country’s first ropeway, the 22-km link between Makawanpur and Kathmandu, had started in 1922 under the orders of Prime Minister Chandra Shamsher. In the latter half of the 20th century, the country had many more ropeway lines. In 1986, Hetauda Cement Factory started one to ferry limestones.

In 1995, the Conservation Ropeway was built at Bhattedanda on the outskirts of Kathmandu valley to transport milk. There were a few other lines as well. But they soon fell into disuse as the national focus shifted to roadbuilding, despite clear evidence of the cost-effectiveness of the ropeways. Now the discourse on the revival of ropeways in Nepal has again started. Seven ropeways for human transport and almost a dozen gravity goods ropeways are in operation in Nepal.

Reports suggest that the country could have ropeways in nearly 2,000 areas and feasibility studies have been conducted in 62 places. But to install a ropeway for people transport in Nepal, an investor has to get approval from 21 different government authorities. “We’ll not attract investors unless our bureaucratic hurdles are simplified,” says Guna Raj Dhakal, chairperson of Ropeway Nepal Pvt Ltd. Installing ropeways is six times cheaper than building roads and the maintenance cost is also low.

The 42-km Hetauda-Kathmandu Ropeway, for instance, cost half as much as the Tribhuvan Highway on the same route to build. “Yet the government is still skeptical about ropeways,” adds Dhakal. “We don’t even have a dedicated ropeway department or policies for that matter.” IME Group, which built Chandragiri Cable Car under Chandragiri Hills Pvt Ltd, is currently working on additional cable car services. These include Butwal Bazar-Basantapur (3 km), Chisapani Highway-Rajkada (Kailali), Sikles-Kori (Kaski) and Ghantikhola-Swargadwari Temple in Pyuthan district.

Works are also afoot to start a cable car service in Pathivara Temple in Taplejung. Besides, private companies are conducting ropeway transport feasibility studies in Dakshinkali-Chaukhatdevi, Budhanilkantha-Shivapuri Hill and Bohoratar-Nagarjun Hill in Kathmandu; Godawari-Phulchowki Hill in Lalitpur; Ghorahi-Swargadwari Temple in Pyuthan; Ghyangphedi-Gosainkunda in Rasuwa; Lukla-Namche Bazar in Solukhumbu; Devghat-Moulakalika Temple in Chitwan; and Ranital-Maulakalika in Nawalparasi.

Nepal Investment Board is also facilitating the study for an 84-km cable car service from Birethanti-Kagbeni-Ranipauwa to Muktinath Temple in Mustang. If implemented, the project is expected to significantly boost tourism and improve the livelihood of local people. “Ropeways have the potential to alter the economy of Nepal as it can boost tourism, improving income-generation and employment opportunities,” says Delmon. “As Nepal has huge potential in hydropower, ropeways are highly feasible here.” “During the monsoon season, the rural road network which is around 4,500 km across the country gets impacted by the heavy rain, flood and landslides resulting in connectivity loss to the district headquarters for around one-fifth of the total population,” she adds.

Year 2022 marked the centenary of the start of the ropeway in Nepal. Renewable Energy Confederation of Nepal (RECON), Nepal Ropeway Association, and other relevant institutions had celebrated the 100 years by holding seminars on the importance, relevancy, and revival of ropeway technology in Nepal. They hoped these events would push the government authorities to rethink the revival of ropeway transport in Nepal, but to no avail.

The book ‘Ropeways in Nepal’ by Dipak Gyawali, Ajaya Dixit, and Madhukar Upadhya recounts many past success stories of Nepali ropeway projects, but the idea of developing ropeways to ease the problem of transporting goods and humans has simply not registered on the minds of the government officials and ministers. “The fact is the government officials and ministers do not get much commission from ropeway development unlike road projects,” says Gyawali, who is also a former water resource minister.

After the success of pioneering ropeway projects, the government incorporated plans and policies for improving and extending the existing ropeway services in the fifth Five-Year Plan. With grant assistance from the US government, the old 22-km long, low-capacity mono-cable system between Dhorsing and Kathmandu was replaced and extended with a 42-km-long bi-cable ropeway between Hetauda and Kathmandu.

The sixth Five-Year Plan proposed developing gravity ropeways in the hills and mountains to transport daily goods and Rs 6m was allocated to execute the plan, but nothing came of it. After the restoration of multi-party democracy in the 90s, the eighth Five-Year Plan incorporated ropeways under the sub-sector of ‘other modes of transport’ and announced a program for consolidating the existing ropeways and operating them at full capacity.

There was also the plan of encouraging the private sector for the development of short-haul ropeways to promote tourism as well as developing gravity ropeways. For these purposes, the government of the time allocated Rs 158m. The next national plan announced a more ambitious 20-year National Transport Master Plan that included a cable car/ropeway development program and privatization of ropeway transports so that they could be operated more effectively.

The approach paper of the 10th Five-Year Plan (2002-2007) again stated that policies for developing ropeway transportation would be adopted. It also set the aim of encouraging private entrepreneurs to construct and operate cable car/ropeways in places with importance for tourists and local economies where road access is lacking. Priority for cable car/ropeway development would be accorded to those areas where the cost of constructing and operating roads would be comparatively high.

Experts say though policies and modest-scale programs were incorporated in Nepal’s Five-Year Plans, the progress over the years have been slow. In fact, they add, the ropeway development plan has more or less remained stagnant since 2007. Its potential to become an important segment of the country’s transport system was not realized. Operation and maintenance head of Manakamana Cable Car, Nepal’s first human transport ropeway, Sunil Karmacharya says that Nepali market, these days, is more attracted to human transport ropeways than material transport. The Manakamana Cable Car has been in operation for 25 years now.

“Back then, there used to be around 500,000 passengers per year which now has around 1.1m passengers. However, I see lesser chances in mass carrying ropeways in Nepal,” he says these cable cars, if operated properly can be enough for mobility and transport.  

The Nepal Stock Exchange (NEPSE) gained 25.66 points to close at 1,927.65 points on Tuesday. Similarly, the sensitive index surged by 2.87 points to close at 365. 09 points. A total of 5,541,878-unit shares of 269 companies were traded for Rs 1. 98 billion. Meanwhile, Nyadi Hydropower Limited was the top gainer today, with its price surging by 9. 85 percent. Similarly, Century Debenture was the top loser as its price fell by 3.04 percent. At the end of the day, total market capitalization stood at Rs 2. 81 trillion.

The government's hope to boost its revenue by taxing nearly 4,000 vehicles parked in different customs yards without clearance is being dashed with auto importers continuing to ignore the government’s call to clear their imports. Automobiles are among the highest revenue-generating imports for the government. The government expects to generate as much as Rs 8 billion once the vehicles parked at the customs yards are cleared. “We have estimated to earn Rs 7-8 billion if the imports are cleared by our customs offices,” said a senior official at the Department of Customs (DoC). “It would be a big relief for the government which is struggling to collect revenue as targeted.” The vehicles were imported based on letters of credit issued before last year's import ban, and have continued to remain parked at customs yards. Officials said the importers have not yet made any efforts to clear these vehicles even though the budget for the next fiscal year 2023/24 has already been presented on May 29. There have not been any changes in taxation on imports of fuel-based vehicles. “If the duty was hiked, those who haven't cleared their imports might have to pay more to clear the parked vehicles,” the DoC official said. However, automobile dealers said that they were forced to keep the imported vehicles at the customs yards due to the lack of demand in the market and also because of lack of bank loans for auto dealers and customers as well. Anup Baral, Managing Director of Narayani Auto Business said that the dealers could not clear the vehicles parked at customs yards because of around 80 percent slump in demands in the market, lack of availability of working capital, and high-interest rates. “Many auto dealers don’t have money to pay the high import duties at the moment,” he said. He however said that some auto dealers have started to clear a limited number of vehicles parked at the customs yards and making fresh imports lately in line with the current market demand. “People’s growing preference for electric vehicles also contributed to a decline in demand for fuel-based vehicles,” Baral added. Before the budget presentation, the customs department didn’t want to pressurize the automobile dealers to clear these vehicles in customs. “It is because we didn't want to give the impression that something is happening on the tariff to be charged on imported vehicles before the budget,” the customs official said. “Now, we plan to ask them to bring the vehicles in after completing the customs clearance process.” Auto imports declined since the government imposed a complete ban on their imports in April 2022 amid depleting foreign exchange reserves that created fear that the country would head in the direction of the Sri Lankan economic crisis. Even though the government lifted a ban on the import of vehicles among others in mid-December last year and removed all import restriction measures in January, there has not been a substantial rise in imports of automobiles. Since the import ban was lifted, Nepal imported automobiles and their parts worth around Rs 18 billion till mid-May of this fiscal year, according to the Trade and Export Promotion Centre (TEPC). Overall imports of automobiles and parts till mid-May stood at Rs 41.27 billion, according to TEPC. During the first 10 months of the last fiscal 2021/22, Nepal imported vehicles and their parts worth Rs 86.80 billion. With auto imports slumping, it has badly affected the government revenue. With just a month and 10 days remaining before the current fiscal year ends, the government has been able to collect just over 50 percent of the annual target, according to the customs department. “DoC had an annual target of collecting Rs 668 billion but it has so far collected only Rs 342 billion,” the DoC official said.