Stay the courseGovt’s early move to break transport cartel should continue
The Oli government has shown its resolve in breaking cartels, starting with transportation groups. On April 16, the Federation of Nepalese National Transport Entrepreneurs (FNNTE) threatened to hold a nationwide public transport strike beginning May 3. The government’s response to this threat is one that has been lauded by the public for its boldness. According to government, the permits of any transport operator taking part in the strike will be cancelled immediately. This is a welcome move—transport committees have been acting as cartels and holding the public transportation sector hostage for far too long.
A cartel is a grouping of service providers or producers in a market sector that is formed to protect the interests of the group at the cost of the consumers. Cartels stymie competition of all forms. They can also form barriers to entry in the market. All this leads to higher prices and lower quality. This is exactly what is plaguing the public transport sector of Nepal.
Bus operators plying the Banepa-Kalanki route were charging consumers Rs45 per person to ride on their buses. The operators, all belonging to one of 11 transport committees, were running sub-standard buses and new operators could only enter service after joining one of these syndicates. This was just one instance of how the cartels have run amok in Nepal.
But on March 15 this year, the Department of Transport decided to award Mayur Yatayat, a new player in the sector, a permit to run this route. Mayur, without joining a cartel, began its service with innovative disruptions. For one, it offered consumers the same ride for Rs35 (against Rs45 charged by its competitors). It also let senior citizens ride for free, and allotted reserved seats for pregnant women. Moreover, it provided free internet access; and most of its buses had CCTV cameras installed for security. Mayur’s service led to a series of protests.
First, the 11 committees that run their buses on the same route tried to block Mayur’s buses, and tried to disrupt the service in early April. Immediately, the government threatened not to renew the protesting committee’s permits, which made them back down for a while. Second, when the committee resumed their protests, the government made a decision not to renew the permits of all transport cartels throughout the country going forward. The FNNTE then responded by threatening a nationwide strike. It was this response that led to the government banning the disruption of all essential services—transportation included—this past Tuesday. And this move has already started to prove effective.
Now, even as the committees publicly stand against the new regulations on the one hand, they have been reported to have already approached the Office of the Company Registrar to register as individual companies. The government should stay firm on its move to dissolve cartels, and cast a larger net over other sectors going forward. This will indeed be the first major political sign from the Oli government that it means business.