Bagmati province is delaying the legalisation of ride-hailing services, fearing a backlash similar to last month’s protests by transport operators in Gandaki province after the rollout of the guidelines there.

“We submitted the draft guidelines to the Finance Ministry of the federal government about a month and a half ago, but it is still awaiting discussion,” said Birendradev Bharati, secretary at the Bagmati provincial Ministry of Labour, Employment and Transport.

Once approved by the Finance Ministry, the draft will be forwarded to the Law Ministry and then submitted to the provincial cabinet for final approval.

“The process has slowed after the Gandaki province's guidelines faced strong resistance from transport operators,” he said. “If transport entrepreneurs also protest here, implementing the rule will be futile. We hope the federal government will take the lead and provide a clear way forward.”

Gandaki became the first province to enforce guidelines to regulate ride-hailing companies on May 13, becoming the first province to do so. However, the move sparked uproar, particularly after allowing vehicles with private number plates, especially motorbikes, to operate as public transport.

The Federation of Nepalese National Transport Entrepreneurs and several transport labour unions strongly opposed the guidelines, arguing that the new rules contradicted the Motor Vehicles and Transport Management Act of 1993.

They staged protests, including a nationwide suspension of both long- and short-route public transport.

Public transportation in Gandaki province stopped on May 30, after the guidelines were published in the provincial gazette on May 15. Transport entrepreneurs claimed that allowing red-plated private vehicles to operate commercially undermined their investments and violated national transport law.

Following intense pressure, the Gandaki provincial government suspended the implementation of the guidelines on June 3 for one month after a formal request from the federal government.

Provincial officials argue that the new guidelines promote oversight, taxation, and commuter safety in the growing digital transport sector, critics say the delay could empower syndicates that have long resisted competition from app-based services.

Many citizens took to social media to condemn the protests by transport entrepreneurs, accusing them of monopolistic practices and expressing how ride-hailing apps had made commuting far more convenient.

Through these apps, users can book, track, and pay for rides via smartphones, which has helped navigate Kathmandu’s notoriously congested streets.

App-based ride-hailing has dramatically transformed urban transportation in Nepal, especially in the Kathmandu Valley. Motorbike ride-hailing services, in particular, have become a major source of employment for young people.

Adding fuel to the controversy, the Supreme Court issued an interim order last Tuesday preventing the Gandaki Provincial government from suspending the guidelines.

A division bench of justices Til Prasad Shrestha and Mahesh Sharma Poudel ruled in response to a writ challenging the provincial government’s June 3 decision to pause enforcement.

The ride-hailing debate intensified after the Auditor General’s 61st annual report raised concerns about using private vehicles for commercial purposes.

The report pointed to a lack of registration with the Department of Transport Management, potential tax evasion, and inadequate sector regulations.

Nepal’s Motor Vehicles and Transport Management Act (1993) prohibits using private vehicles for commercial transport, creating legal complications around tax collection and enforcement for ride-hailing companies, many of which currently operate in a legal grey area.

This regulatory vacuum has raised broader concerns about fair competition, rider safety, and labour protections for gig workers in the rapidly expanding digital economy.

The proposed guidelines in Bagmati province aim to formalise and regulate ride-hailing services operating through mobile apps. Companies must register with the provincial government concerned, maintain a local office, ensure passenger safety, and comply with regulated fare structures.

In February 2023, the federal government amended the Industrial Enterprises Act (2020), officially recognising ride-hailing as a legal, service-oriented business seven years after such services began operating in Nepal.

In January 2024, the Supreme Court directed the government to expedite legislation to regulate ride-hailing platforms, citing the sector’s rapid growth and lack of oversight.

Following the Supreme Court’s directive, Gandaki province officially became the first to legalise ride-hailing.

Under Gandaki’s new rules, unregistered ride-hailing and vehicle rental service operators face a fine of Rs100,000.

Companies offering two-wheeler ride-sharing or rental services must pay an approval fee of Rs25,000 and an annual renewal charge of Rs12,500. For four-wheelers, the fees rise to Rs50,000 and Rs25,000, respectively.

Interestingly, while the guidelines set out these registration and approval fees, they do not yet specify fare rates for ride-sharing or rental services.

To register with a ride-hailing company, a two-wheeler owner must pay Rs500, while a four-wheeler owner pays Rs2,000. The companies must submit Rs5,000 for each two-wheeler and Rs20,000 for each four-wheeler as a service charge to the transportation office.

Although vehicle owners are exempt from annual renewal charges, ride-sharing companies can collect a service fee of up to 12 percent per transaction from affiliated riders or drivers.

The Gandaki guidelines also impose operational limits. Registered vehicles may not operate beyond a 20-kilometre radius, and riders may not work more than 12 hours a day.

The guidelines prohibit giving rides to passengers accompanied by children under 10 or the elderly.

Additionally, riders must have held a driver’s licence for at least a year to be eligible for registration. In compliance with existing laws, all registered vehicles must carry third-party insurance and coverage for the rider and passengers.

Nepal's ride-sharing saga began making legal headlines in 2019 when advocate Shyam Kumar Shrestha filed a petition to cancel Pathao Nepal’s registration.

The Supreme Court refused to issue a stay order and dismissed the petition on June 27, 2019.

The full text of the verdict was only released in April 2025.

Without proper guidelines, many consumers continue to face problems such as price gouging and safety issues, with no established mechanism to address their grievances.

As the debate continues, the federal and provincial governments are under pressure to balance promoting innovation in transport and upholding existing laws and investments in public transport infrastructure.