The enactment of guidelines to streamline popular ride-hailing services and companies appears to be in doubt.

On February 1, the government amended the Industrial Enterprises Act 2020 to include ride-hailing business as service-oriented, giving it a legal status after seven years of operation in Nepal.

The government then drafted the guidelines.

But six months have passed, and the ride-hailing guidelines appear nowhere.

Now, the Ministry of Labour, Employment and Transport, Bagmati Province, has formed a committee to study the ride-hailing guidelines further.

“We sent the guidelines to the Bagmati provincial cabinet in mid-May, but it returned the draft in mid-June asking us for further study and clarity,” Balram Niraula, secretary at the Ministry of Labour, Employment and Transport, Bagmati Province.

“And now, we formed a committee and are studying accordingly.”

There are some legal issues, he said.

The Transport Management Act of the federal government prohibits the use of private number plate vehicles for public transport and states that they should be used for the purpose of what they were registered for.

“We prepared the draft based on the provincial government Act that provides private vehicles for public use with special permission from the government.”

“Now the provincial cabinet has asked us to clear the confusion between the two legal provisions.”

Niraula said the study committee is working on this. Once the committee prepares the report, further work will proceed.

He said the cabinet has pointed out the need to clarify software verification, among others.

“We were planning to introduce the guidelines, and at the same time, Gandaki also did it. But the province rolled back its decision, following protest from public transports, and now it has been stranded.”

In July, public transport operators in Gandaki staged protests after the provincial government proposed new guidelines to legalise ride-hailing services.

The operators halted public transport services in Pokhara, objecting to the provision of guidelines that permit vehicles with red number plates (private) to transport passengers.

When ride-hailing—or ride-sharing—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.

Online app-based ride-hailing has drastically changed transportation, especially for the people in Kathmandu Valley. Ride-hailing motorbike taxi services employ thousands of people in Nepal, especially youth.

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 and do not pay taxes.

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 how Nepalis travelled.

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

Foreign companies operate most ride-hailing apps in Nepal.

The 61st annual report of the auditor general said that despite private number plate vehicles being operated through ride-hailing platforms as public vehicles, they are not registered with the Department of Transportation Management to provide such services.

Despite five years of Patan High Court's direction to regulate the sector by making law, the government has not been able to bring the guidelines, ride-hailing companies said.

The auditor general's report has been pointing out the issues concerning regulation of ride-hailing services, but nothing has been done yet about them.

“The government is confused about the innovative and tech-based business, which has created a lack of clarity in operating business,” said Asheem Man Singh Basnyat, managing director of Pathao Nepal, Nepal’s popular ride-hailing platform.

“We have been unable to operate the service freely,” he said.

The government has been preparing the draft without even taking suggestions from concerned stakeholders that it lacks basic points for gig business, said Basnyat. There is a lack of study among government officials about how tech-based businesses like ride-hailing services operate.

“The government’s lack of understanding of innovative business will hinder the attraction of foreign investment in this sector, and domestic entrepreneurs will also leave the country,” according to Basnyat.

Industry insiders said that using the legal loopholes, ride-hailing services are being operated in the country without a local contact person or office, without hiring staff, and without providing insurance and other facilities.

Using such services will ultimately risk the lives of service seekers.

According to Pathao Nepal, there are 150,000 registered riders and drivers associated with Pathao, of which more than 60,000 make regular incomes using the platform.

Using the company’s platform, 65,000 daily ride services are provided by two-wheelers, around 10,000 by four-wheelers and 1,000 by three-wheelers.

Pathao has expanded its ride-hailing service to 20 cities across the country, covering most urban areas. The company employs more than 200 people full-time.

After operating unofficially for two years, the ride-hailing application inDrive was officially launched in Nepal in May. Currently, inDrive’s ride-hailing service is available in Kathmandu, Pokhara and Chitwan. The company offers taxi, motorcycle, delivery and intercity rides in Kathmandu.