Out of the more than Rs8 billion owed to Indian upstream service providers, primarily Tata and Airtel, only around Rs1 billion has been paid by Nepali internet service providers over the past two years.

WorldLink Communications has received a recommendation for foreign currency exchange and has made a payment of approximately Rs1 billion as the first instalment, according to Sudhir Parajuli, president of the Internet Service Providers’ Association of Nepal.

Parajuli said that the government is delaying the recommendation for foreign currency exchange until all outstanding taxes are cleared.

Although taxes for the previous fiscal year have already been paid, the recommendation has been stalled due to unpaid taxes from the most recent fiscal year. He added that ISPs are in the process of gradually settling the dues owed to the government.

He further said that the government should have provided the foreign exchange recommendation for at least the previous fiscal year. This would have helped reduce the outstanding payments to upstream service providers while also allowing ISPs to clear taxes due for the last fiscal year.

Subisu Cablenet alone has around Rs1.5 billion in unpaid dues to these providers.

Dues to upstream service providers have remained unsettled since 2023.

Airtel supplies 70 percent of Nepal's internet bandwidth, while Tata supplies 20 percent, accounting for 90 percent of the country’s overall internet services.

Kosh Hari Niraula, joint-secretary at the Ministry of Communication and Information Technology, said that telecommunications service providers have committed to clearing their tax dues and gradually paying their outstanding debts.

If they meet their tax obligations on time, the remaining dues to upstream service providers could be settled within three to four months.

Niraula stated that the ministry has begun recommending foreign exchange services to ISPs in an effort to ensure uninterrupted internet services across the country.

On February 2, internet users across Nepal faced a nationwide service disruption for nearly an hour.

While the initial suspicion pointed toward unpaid dues, the real cause was later identified as fibre cuts in Airtel’s network in Birgunj and Bhairahawa, which disrupted services for 47 minutes.

A similar incident occurred on May 2, 2023, when Airtel cut its services due to unpaid dues. Services were only restored after the Nepal Telecommunications Authority (NTA) promised to resolve the payment issue.

That disruption began at 5 pm and continued for five hours. Indian vendors have repeatedly issued warnings regarding overdue payments from Nepali ISPs.

Niraula said the Office of the Auditor General and the relevant parliamentary committee have directed the ministry to recommend foreign currency exchange only after the telecommunications service providers settle their government taxes.

Based on this, the ministry has made recommendations for foreign currency exchange for Nepal Telecom, Ncell, and WorldLink Communications. However, he mentioned that a significant amount remains unpaid to upstream service providers, as only a few companies have fully cleared their tax liabilities.

In the case of WorldLink Communications, the company has agreed to settle the remaining dues as instructed by the Office of the Auditor General.

Niraula said that once those payments are made, a further recommendation will be provided. Subisu Cablenet, on the other hand, still owes more than Rs170 million in taxes to the government.

The ministry has recommended foreign currency exchange amounting to US $1 million for WorldLink Communications for the previous fiscal year. For other internet service providers that have cleared their taxes, the ministry is currently facilitating foreign exchange approvals.

Niraula confirmed that the ministry has recommended Nepal Rastra Bank provide foreign currency services to support payments to Indian upstream service providers.

A former parliamentary Public Accounts Committee had instructed the government to exempt ISPs from paying taxes on non-telecom components such as web services, co-location, hosted services, disaster recovery, managed services, data centres, and cloud services.

The committee had also stated that ISPs should not be liable for royalties and Rural Telecommunications Development Fund (RTDF) charges for the fiscal years 2017-18, 2018-19, and 2019-20.

However, the auditor general, Nepal’s constitutional audit authority, disagreed with this waiver and directed the government to recover the charges. As a result, the government instructed ISPs to settle the dues.

The current Parliament’s Public Accounts Committee has again directed the Ministry of Communications and Information Technology to ensure all outstanding dues from ISPs are recovered.