With just two days left until the deadline set by Indian bandwidth providers for Nepali internet service providers (ISPs) to clear past dues, Nepal Telecommunications Authority, the regulator, wrote to the Nepali companies on Friday, instructing them to ask the Indian suppliers not to disrupt the services.

Tata and Airtel, the Indian firms that provide bandwidth to Nepali ISPs, have threatened to cut the services from January 1 if the ISPs failed to clear the dues of the past nine months. A disruption in bandwidth supply will throw the system into total disarray, insiders say.

“We have written to the Internet Service Providers’ Association of Nepal urging them to coordinate with international bandwidth providers not to cut internet services. The service should not be shut down,” said Santosh Paudel, director of Nepal Telecommunications Authority.

The Nepali ISPs have not been able to clear their dues to the Indian firms after the government refused to provide them the needed foreign currency, citing unpaid royalties and taxes.

“The dispute regarding the royalties and Rural Telecommunications Development Fund would be resolved through talks,” Paudel said. “We are in constant discussion to resolve the issue as soon as possible.”

He said that the internet is an essential service and should not be interrupted.

While the Public Accounts Committee of the past parliament had ruled that internet service providers should be exempted from paying taxes on non-telecommunications components, the Ministry of Communication and Information Technology rejected the ruling and declined to provide the companies foreign exchange service.

“It is the ministry that will decide what to do regarding the tax issue,” said Paudel.

The parliamentary committee had ordered the government that internet service providers should be exempted from paying taxes on non-telecom components like web service, co-location, hosted service, disaster recovery, managed service, data centre, and cloud service.

Following the order, in a letter dated July 15, 2018, the licensing department of Nepal Telecommunication Authority wrote to the Inland Revenue Department requesting not to charge the internet service providers the telecommunication charges on non-telecommunication services.

The committee had said that the internet service providers do not have to pay royalties and Rural Telecommunications Development Fund charges for three fiscal years—2017-18, 2018-19 and 2019-20.

“As the telecom authority is itself the regulator, it should recommend whether the taxes should be exempted or not. We will proceed accordingly,” said Baburam Bhandari, joint secretary of the Ministry of Communication and Information Technology.

The telecom regulator and the ministry, however, are passing the buck to each other.

The regulator says that the ministry is the final authority to decide the matter, while the ministry officials say the issue falls under the jurisdiction of the regulator.

“We have decided not to give recommendation for foreign exchange service since the ISPs have arrears with the government,” said Bhandari.

“But if the telecom authority writes to us to provide them foreign exchange service, we will comply.”

Sudhir Parajuli, president of the Internet Service Providers’ Association of Nepal, said they received the letter from the telecommunications Authority on Friday. “We will write to international bandwidth providers requesting them not to cut bandwidth supply until the government arrives at a decision on the tax dispute,” he said.

“Now things are not in our hands. It will be up to the international bandwidth provider to decide on it,” said Parajuli.

A discussion was held last week among the representatives from the ISPs, Nepal Telecommunications Authority and Communication Ministry. “We were asked to brief them on the situation. We gave all the details, but there have been no updates since then,” Parajuli said.

Internet service providers said that the government has listed internet service as an essential service, but the government is not serious about the consequences of its inaction.

“The bandwidth providers are disappointed with us. When it takes nearly a year to get payments, none of the bandwidth providers are willing to sell their services to us,” said Parajuli. “If we fail to clear the dues on time, we will land in trouble,” he said.

The bandwidth providers look for profits given the risks involved, so they may not work with us if it is not profitable, he said.

Officials from the two Indian firms—Tata and Airtel—had visited Nepal last week to discuss the issue.

Nepali ISPs own around Rs3 billion to their Indian suppliers.