Regulations for Ride-Hailing Companies Closer in Bagmati Province

The administration of Bagmati province is close to finalizing a set of rules for app-based ride-hailing companies. This is almost seven years after these services launched in Kathmandu, the capital of Nepal. The very first ride-sharing app in the region was launched domestically back in 2017, marking a major change to its transportation.

Balram Niraula, Secretary at the Ministry of Labour, Employment and Transport for Bagmati province, has stated that the draft Ride-Sharing Guidelines is completed. He communicated that the Ministry is ready to submit this draft for approval by the Ministries of Economic Affairs, Planning, and Law. Once the consent is obtained, the next stage will be to table it before the provincial cabinet for further deliberations. Niraula anticipates that it will take a month to accomplish this phase.

This regulatory milestone precedes the Nepal Investment Summit taking place on the 21st of April, which focuses on making Nepal an investment hub for foreigners.

Ride-sharing applications were launched in the year 2017 and have completely revolutionized the urban transport system by allowing commuters to book, track, and pay for rides using their mobile phones. This convenience has proved most helpful in the congested streets of big towns. The transition towards digital commuting has revolutionised the way people move around Kathmandu Valley and it has also given employment opportunities to many—especially, young adults.

However, with its increasing acceptance and use by commuters; issues emerge as cases of harassment have been documented. Official government records show that despite the fact these ride-hailing companies are experiencing significant financial growth in Nepal they have been running without proper registration or tax compliance.

"The guidelines meant to address these concerns experienced delays," Niraula conceded. "However, we've recently accelerated our efforts. The impending guidelines will formally organize these ride-hailing entities."

The Auditor General's 60th annual report highlighted several irregularities including tax and insurance evasion by these companies. The report revealed that the international ride-sharing enterprise inDrive facilitates around 29,300 rides daily with an impressive yearly revenue of Rs 2.11 billion but operates without formal registration.

Though American-based inDrive made its way into Nepal just last April and boasts over 150 million app downloads across 47 nations, it operates similarly unregulated as per the audit findings.

Of the 25 GPS and digital platform-based ride-hailing services in Nepal identified within the report, none uphold an appropriate registration for their current mode of operations.

Niraula indicated that the proposed guidelines include obligatory vehicle registration for ride-sharing operators—mandating them to register vehicles analogously to conventional taxis subject to the Transport Ministry's regulations.

Furthermore, these companies would be required to renew their authorizations annually through transport management offices. Also encompassed within these guidelines are fare regulations and compulsory insurance coverage for riders.

Following government action targeting ride-hailing platforms like Tootle and Pathao back in January 2019—which was later retracted due to public outcry—the Patan High Court mandated service regulation in February 2020.

By June 2022, Bagmati province officially legalized ride-hailing activities but didn't promulgate any specific guidelines or policies. Notwithstanding this legalization, companies could operate mobile apps through registrations with the Transport Department alone.

Per the Motor Vehicles and Transport Management Act of 1993, private use vehicles must not provide public transportation services nor be utilized beyond stated purposes.

Moreover, despite a Supreme Court ruling confirming customer entitlements to insurance coverage from ride-hailing apps, an exact insurance sum hasn't been stipulated yet.

Predominantly foreign companies administer Nepal's numerous ride-sharing applications. "Foreign operations or investments should be governed separately under distinct legislation since our guidelines only regulate local companies,” explained Niraula.