Govt-community forests conflict deepens in Lumbini

Incident-1

As many as 56 community forests in Gulariya, Bansgadhi, Barbardiya, Thakurbaba, Madhuwan, and Badhaiyatal rural municipalities of Bardiya were preparing to process forest resources after getting their respective forest management plans approved. However, Praveen Bidari, the District Forest Officer (DFO) at the Division Forest Office in Bardiya, was transferred before the forest resources harvesting process could begin. The newly appointed DFO, Bijay Subedi, put a halt on the process, insisting that the plans needed to be redrafted.

“Once a management plan is approved, the transfer of a forest officer should not have made any difference,” said Gopal Prasad Chaudhary, president of the Bardiya chapter of the Federation of Community Forest Users Nepal (FECOFUN). “Preparing one plan costs the forest user groups at least Rs 50,000–60,000. Under the new guidelines of the Forest Promotion System, 2023, as asked by the new DFO, it will cost Rs 300,000–350,000. Where are the users supposed to get this money?”

About 20 percent of the 281 community forests in the district have been affected by the new DFO’s instructions. The affected forest user groups have sought help from their umbrella organization—the Bardiya District Chapter of FECOFUN. Although forest consumers made both written and verbal requests to the Division Forest Office, the DFO did not relent. This forced forest user groups to stage a sit-in at the Division Forest Office. They protested for four hours each day on December 5 and 6. The protests were suspended after two days when the DFO expressed a commitment to resolve the issue through dialogue.

FECOFUN formed a negotiation team under its district president, Gopal Prasad Chaudhary. Vice President Rama Kumari Paudel, members Bhumi Raj Lamichhane and Baijanath Kamath, Shanta Gyawali (President of FECOFUN Gulariya), Meena Rijal (President of FECOFUN Bansgadhi), Lal Bahadur Khatri (President of FECOFUN Barbardiya), and Ram Prasad Kafle (President of FECOFUN Badhaiyatal) were also in the team. The committee held its first meeting with DFO Subedi last week, but the DFO remained firm in his stance.

Responding to a query about why forest user groups were protesting, the DFO said it was not clear whether their forest management plans were truly approved. “Every page of the management plan must have a signature, but the so-called approved plans have signatures only on the first page. How can such plans be considered valid?” Subedi said.

FECOFUN officials say DFO Subedi is trying to integrate community forests into the Forest Conservation System. While he argues that incorporating elements like maps and statistical data from the old plans would reduce the cost of preparing a new plan, forest user groups are not convinced by his arguments. He has also promised to assist them in drafting the plans.

Meanwhile, Praveen Bidari, who was transferred from Bardiya shortly after approving the plans, insists that all procedures were followed. “If my signature is the only issue, I am ready to return and sign the documents at any time. But it is not just about signatures. The individuals involved in drafting the plans, like Tanka Gurung, who is now in Banke, and Pankaj Jha, who is with the forest ministry, can verify the process,” he clarified.

DFO Bardiya has already persuaded 18 of the 55 community forests to prepare new plans. At least six of them are said to be in the final stage of preparing their new plans. Officials of FECOFUN Bardiya say the protest has only been suspended, not stopped. The forest user groups argue that redrafting plans approved under the prior guidelines not only wastes financial resources but also stalls crucial forest-related activities.

Incident-2

A conflict between the community forest user group and the Tansen Municipality over the management of the Srinagar Hill forest in Palpa has resulted in the freezing of a budget of Rs 18m allocated for activities like stone paving on trails, repairing cottages, constructing swings, and other beautification works.

The dispute revolves around the ownership and revenue rights of Srinagar Forest, spread over 113 hectares. Six community forests—Lower Srinagar, Ukale Pipal, Bhusal Danda, Chandi, Kailash Basanta, and Srinagar Ganesh—merged in 2001 to form the Integrated Srinagar Ecotourism Forest Users Group. However, disagreements between the municipality and the committee over control of the forest and its earnings have heightened in recent years.

According to Bishnu Basyal, a member of the committee, while the Srinagar Ecotourism Area belongs to the community forest, the municipality unilaterally started charging entry fees under the guise of ecotourism. Tourists visiting Srinagar Hill are charged Rs 20 as an entry fee. They are also required to pay vehicle parking charges and additional fees for other activities. In the last fiscal year alone, the municipality collected Rs 2.6m in revenue from the Srinagar Hill.

Kalpana Bhandari, chairperson of the FECOFUN Lumbini Province, argued that the municipality has no authority to collect fees from community forests. “The income generated within a community forest belongs to the user group. The municipality should stop collecting fees,” she added.

Tansen Mayor Santosh Lal Shrestha, however, defended the municipality’s actions, claiming that the local government has been maintaining the area since the 1950s. “This area falls under our jurisdiction. Which law states that local governments cannot charge fees?” Shrestha questioned.

The municipality’s involvement only began after local representatives assumed office in 2022. The forest was previously managed by the user group.

Srinagar Hill has become a popular attraction for domestic tourists, particularly from Butwal and Bhairahawa, for its scenic views and picnic areas. The increased revenue potential has heightened the interests of both the user group and the municipality, leading to the current standoff.

The FECOFUN Lumbini Province and its central body have been pressuring the government to resolve the issue. The Butwal High Court last year ruled that operations in the Srinagar Hill area should be conducted in compliance with the law. However, the local government has been interpreting this ruling as giving them ownership, while the Forest Act stipulates that ownership lies with the user group.

In March of last year, the central committee meeting of FECOFUN convened at Damkada of Palpa and passed an 18-point declaration. It called for the implementation of an interim order of the Supreme Court to halt illegal fee collection by provincial governments.

Additionally, FECOFUN Lumbini Province has prepared a four-year strategic plan (2023–2027). According to Kalpana Bhandari, the plan identifies taxation by all three tiers of government as the major challenge facing community forests in the province. This plan underscores the urgent need to clarify roles and responsibilities in forest management to avoid overlaps and disputes that hinder community forest programs.

Incident-3

Tansen Municipality Office on November 17 sent a notice to all community forest user groups within the municipality, demanding their approved annual work plans and 10 percent of their forest product sales revenue from the past eight years within seven days.

“Community forest user groups within Tansen Municipality are hereby directed to submit their approved annual work plans within seven days and deposit 10 percent of the revenue from forest product sales since fiscal year 2017/18 into the municipal consolidated fund,” reads the letter issued by the municipality’s Chief Administrative Officer Hari Ram Nagila.

Section 62 (B)(1) and (2) of the Local Government Operations Act, 2017, states that community forest user groups must have their annual forest product sales and utilization plans approved by the municipality and deposit 10 percent of the revenue into the municipal fund.

However, none of the 129 community forest user groups in Tansen Municipality has submitted their work plans, deposited the funds, or responded to the municipality’s letter.

Prem Shahi, secretary of the Integrated Srinagar Ecotourism Forest User Group, termed the municipality’s decision as a ‘dictatorial’ policy.

Mayor Shrestha, however, defended the decision, arguing that existing legal provisions require community forest user groups to deposit 10 percent of forest product sales revenue into the municipal consolidated fund.

These three incidents are only representative cases of growing disputes between community forest user groups and local and provincial governments across Lumbini Province. Since the constitution has placed natural resource revenue in the shared jurisdiction of federal, provincial, and local governments, community forest user groups have been saying that they are overburdened with taxes across all three tiers of government.

Thakur Bhandari, central chairperson of FECOFUN, said forest user groups have been forced to pay 10 percent of forest product sales revenue to local governments, 10 percent of the revenue on internal sales, and 25 percent for exports to provincial governments, as well as 13 percent VAT, 15 percent advance income tax, and 25 percent income tax to the federal government. “Community forests, as non-profit organizations, are being unfairly taxed by all three tiers of government,” Bhandari added.

Bhandari said community forest user groups are suffering the most in Lumbini Province. “It seems that the Lumbini government does not even recognize the existence of community forests. They are treating us as for-profit enterprises by imposing excessive taxes,” he added. “The provincial government has continued to disregard a Supreme Court ruling that barred such taxation.”

According to Article 60 (1) of the Constitution of Nepal, 2015, the distribution of revenue from shared resources should follow federal guidelines. Likewise, Section 62 (B) of the Local Government Operations Act, 2017, states that community forest user groups are required to deposit 10 percent of the revenue earned from the sale of forest products into the consolidated fund of the respective municipal bodies. Similarly, Sections 22 and 23 of the Forest Act, 2017 outline the rules governing the annual expenses of user groups. Moreover, Section 12 (A) of the Value Added Tax Act, 1995 imposes VAT on timber auctions.

On 4 Oct 2023, a constitutional bench of the Supreme Court comprising Chief Justice Bishwambhar Prasad Shrestha and Justices Ishwar Khatiwada, Anand Mohan Bhattarai, Prakash Kumar Dhungana, and Sushmalata Mathema issued a stay order on the collection of taxes by provincial governments, questioning the constitutionality of taxes imposed under their forest and financial acts. The bench ruled that such provisions are negatively impacting the operation and management of community forest user groups.

Despite the apex court’s ruling, Lumbini Province has continued to collect funds from community forests under the guise of ‘service charges’ instead of taxes.

Lumbini targets Rs 1.33bn in forest revenue

Lumbini Province boasts 974,381 hectares of forest—134,710 hectares in the plains, 424,200 hectares in the Chure hills, 32,360 hectares in the mid-hills, 85,640 hectares in the high hills, and 6,470 hectares in the Himalayan region. Community forests form a significant portion of the province’s forests, covering 20 percent of the total forest area and managed by 4,052 community forest user groups. The highest concentration of community forests in Lumbini is in Palpa with 701 community forest user groups, followed by Rolpa (605), Dang (534), Gulmi (458), Pyuthan (449), and Arghakhanchi (445). Districts with the fewest community forests include Parasi (58) and Kapilvastu (72).

The Lumbini Provincial Forestry Directorate has set ambitious targets of collecting 1,408,066 cubic feet of timber and firewood from community forests, 71,014 cubic feet from protected forests, 234,750 cubic feet from partnership forests, and 1,686,071 cubic feet from private forests in the current fiscal year. The province government is aiming to generate Rs 1.33bn in revenue solely from forests in the current fiscal year.

Mohan Kafle, secretary of Lumbini’s Ministry of Forest and Environment, said the provincial government has been collecting a 10 percent service charge on internal sales and 25 percent on the export of forest products. “Previously, we were collecting taxes from forest user groups. But after the Supreme Court ruled that provinces cannot levy taxes without specific laws, we rebranded it as a service charge,” explained Kafle.

In the previous fiscal year, the provincial government collected Rs 160m from forest products. It has already mobilized Rs 70m in the first quarter of the current fiscal year. “Due to legal ambiguities and differences with community forest user groups, revenue mobilization has not been satisfactory this year,” he added. “Community forest user groups have been saying that they are being forced to pay taxes to all three tiers of government.”

Community forest user groups have already drawn the attention of Lumbini’s Chief Minister to abolish the service charges imposed under the Lumbini Province Financial Act, 2024.

Acting Provincial Forest Director Dadhi Lal Kandel has suggested that consolidating revenue collection into a single-window system and distributing the proceeds among federal, provincial, and local governments could resolve the issue. This approach could streamline the taxation process, eliminate overlapping charges, and create a more transparent system for managing forest revenues.

Advocate Dilraj Khanal, who filed a petition at the Supreme Court regarding triple taxation, said that the federal law permits local governments to collect 10 percent of revenue from forest product sales. The Office of the Auditor General has also drawn the attention of local bodies toward uncollected taxes. This prompted local governments to demand dues from forest user groups dating back to 2017.

The Supreme Court’s interim order, however, bars provincial governments from levying taxes, including service charges, on community forests. However, Lumbini, Bagmati, and Sudurpashchim provinces have continued to defy this order.

“If provincial governments continue to impose taxes despite the apex court’s ruling, we will file a contempt of court case,” Khanal said. Community forest user groups are determined to challenge what they view as unjust and excessive taxation policies, which jeopardize the sustainability and autonomy of their operations.

‘Collecting fees under the same heading is illegal’

Juddha Bahadur Gurung, member, NNRFC

The Constitution of Nepal, 2015, in Schedule-9, Clause 7, mentions forests, wildlife, birds, water resources, environment, and biodiversity under the shared list of the federal, provincial, and local governments. However, governments at all three levels have been arbitrarily interpreting this provision to collect royalties, taxes, revenues, or service fees from forest resources. 

Juddha Bahadur Gurung, a member of the National Natural Resources and Finance Commission (NNRFC), explains that taxes under the same heading should only be paid once at a single point. “If one government has already collected the tax under a specific heading, another government should not collect it under the same heading. It is illegal for another government to collect taxes, royalties, or fees under the same heading.” 

Since federal laws have not yet been enacted, local and provincial governments may be collecting money under various names. “This anomaly will persist until federal laws are clearly enacted,” Gurung said. 

After the Supreme Court’s ruling against such collections, the provincial government has passed laws to collect money under the name of service fees instead of royalties, circumventing the issue through indirect means, particularly from forest user groups. If such laws conflict with federal laws, they will be nullified. Laws made by local governments that conflict with provincial and federal laws will be overridden by the federal law. 

Similarly, laws made by provincial governments that conflict with federal laws will be considered invalid. Forest users argue that the provincial government’s law to collect money contradicts the federal forest law, and as such, the collection should not occur.

This story has been produced with the support of the Internews Earth Journalism Network through the Media for Inclusive Green Growth project