After seven years of operation, Nepal aims to legalise ride-sharing services

Even with the growing popularity of these services, there have been many instances of harassment. According to the government’s report, ride-hailing companies are increasing in Nepal and generating high revenues, but they are not registered, nor do they pay taxes.


File photo of a person using a ride sharing service through a mobile app. PHOTO: UNSPLASH

February 7, 2024

KATHMANDU – The Bagmati province government has said it is in the final stages of introducing a legal framework for app-based ride-sharing services, seven years after the services were introduced in Kathmandu, Nepal’s capital.

The first Nepali ride-sharing app was launched in 2017.

The draft of the Ride-Sharing Guidelines has been finalised, said Balram Niraula, Bagmati province secretary at the Ministry of Labour, Employment and Transport.

“We will send the draft to the Economic Affairs and Planning and Law ministries for their approval,” Niraula said. “Once the ministries approve the draft, it will be tabled at the provincial cabinet.”

According to Niraula, it would take a month to complete the process.

The plan comes ahead of the Nepal Investment Summit, which is set to start on April 21 with the aim of promoting Nepal as an investment-friendly country.

When ride-sharing—or ride-hailing—apps emerged in 2017, it spurred a veritable revolution in mobility.

Riders could book, follow and pay for their rides straight from their phones and at their doors to quickly navigate clogged streets.

The online app-based ride-sharing brought a drastic change in transportation, especially for the people in the Kathmandu Valley. Ride-sharing motorbike taxi services employ thousands in Nepal, especially young people.

Even with its growing popularity, there have been many instances of harassment. According to the government’s report, ride-hailing companies are increasing in Nepal and generating high revenues, but they are not registered, nor do they pay taxes.

“The guidelines to address the issues have been delayed,” admitted Niraula. “But now, the process has been fast-tracked. The new guidelines will streamline the ride-hailing companies.”

The 60th annual report of the Auditor General has flagged many issues, including non-payment of taxes and insurance by the companies.

The report said that international ride-hailing service inDrive has been operating 29,300 rides daily and has an annual turnover of Rs2.11 billion. “But it is operating informally,” the report said.

The United States-based inDrive launched in Nepal in April 2022. It has more than 150 million downloads and operates in 47 countries.

As per the audit report, there are 25 ride-hailing companies in Nepal using the Global Positioning System (GPS) and digital platforms, but none of them is registered for what they are currently doing.

Niraula said that the draft ride-sharing guidelines have proposed vehicle registration.

That is, ride-sharing drivers have to register their cars and motorbikes in a similar manner as traditional taxis and have to operate under the regulation of the Ministry of Transport, he said.

The companies have to renew their operations annually at the transport management offices.

The guidelines will also regulate the fare, Niraula said. “The guidelines have proposed mandatory insurance for passengers.”

In January 2019, the government cracked down on ride-hailing platforms like Tootle and Pathao, but public pressure forced it to back down as the ride-hailing apps had changed the way Nepalis travelled.

Subsequently, in February 2020, the Patan High Court ordered the government to regulate ride-hailing services.

Bagmati province declared ride-hailing services legal in June 2022, but it did not issue any guidelines or policy. Ride-hailing companies were permitted to operate mobile apps by registering with the Transport Department.

The Motor Vehicles and Transport Management Act 1993 has mentioned that vehicles registered for private use should not be used for public transportation. The law also bars vehicle owners from using their vehicles for other than declared purposes.

The Supreme Court has also ruled that customers must receive insurance coverage, but it has not fixed the insurance amount.

Most ride-hailing apps in Nepal are operated by foreign companies.

“In case of foreign operation or investment, it needs to be addressed by a separate law, as the guidelines only regulate the companies,” Niraula said.

The audit report says ride-hailing companies have been violating the fare schedule approved by the Ministry of Transportation of Bagmati province. The flagdown fare is Rs75 for taxis and Rs30 for motorcycles.

Ride-hailing companies are collecting insurance premiums of Rs2 for taxis and Rs1.75 for motorcycles from their passengers. They have been operating motorcycles by determining their fares.

A ride-hailing company’s app is being used 150,000 times daily, according to the Auditor General’s report.

Despite the provision of passenger insurance in the law, ride-hailing companies have been charging Rs2 per ride illegally, which translates into Rs30 million annually, the audit report said.

In recent times, there has been a surge in offline ride-hailing with drivers of Pathao and inDrive offering such service because they don’t have to pay any commission to their companies.

The police during their rounds have been impounding motorcycles used for the rides and requested people to avoid offline rides that heighten the risks for passengers.

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