Nepal Country Profile

Licences, Infrastructure and Public Utilities

Individual Corruption

Nepalis have to pay bribes in order to receive a number of public services, ranging from admission to a hospital and medical treatment to electricity connections. Regarding electricity, the most common form of corruption seems to be paying extra for an uninterrupted supply and bribes to correct over-billing. Generally, obtaining access to public utilities, including water and telephone connections, is almost impossible without encountering corruption and bribery.

There are also reports that Nepalis have to pay bribes to obtain their driver's licences.

Business Corruption

According to the World Bank & IFC Enterprise Surveys 2009, some companies expect to pay as a simple matter of doing business. Investors frequently complain about bureaucratic delays and lack of transparency in obtaining investment licences. According to the World Economic Forum Global Competitiveness Report 2009-2010, policy instability and inefficient government bureaucracy continue to be among the most problematic factors for doing business in Nepal. Moreover, business executives find the burden of government administrative requirements (permits, regulations, reporting) and transparency in relation to obtaining access concerning changes in government policies and regulations affecting their industries to be problematic.

There is considerable red tape and a lack of transparency in connection with public works in Nepal. Companies should note that the combination of low transparency and low accountability with frequent visits by inspectors may give rise to corrupt practices.

Companies should also note that corruption is rife in connection with obtaining access to public utilities. In the Power Department, linesmen, metre readers, and billing employees are identified as the major actors in corruption. Bribes which extorted directly are identified as the most common form of corruption. Furthermore, corruption in the form of bribes to correct over-billing is also quite common.

Political Corruption

In general, public works and services are rife with corruption. The Commission for Investigation of Abuse of Authority has succeeded in obtaining convictions for corruption in this sector. In 2004, former Minister of Public Works Chiranjibi Wagle was sentenced to two and a half years in prison and was fined NPR 27.2 million for corruption and abuse of power. Another prominent case was the conviction of Ramagya Chaturvedi, head of the Nepal Oil Corporation, who was charged with abuse of authority that allowed him to amass more than NPR 70 million in illicit funds. However, the verdict was reportedly not enforced.

Frequency

The World Bank & IFC: Doing Business 2010:
- To construct a warehouse and obtain the necessary licences, a company must go through 15 procedures, taking an average of 424 days at a cost of 221.3% of income per capita.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give government administrative requirements (permits, regulations, reporting) in Nepal a score of 2.9 on a 7-point scale (1 being 'extremely burdensome' and 7 'not burdensome at all').

The World Bank & IFC: Enterprise Surveys 2009:
- 12% of companies expect to give gifts in order to obtain an operating licence.

- It takes more than 14 days on average to obtain an operating licence.

- It takes around 23 days on average to obtain a construction-related permit.

- It takes more than 10 days on average to obtain an import licence.

- Less than 1% of companies indicate business licences and permits as a major constraint to doing business.