Wednesday, September 7, 2011

RE: Article on "license management procedure"

September 8, 2011
Tek C. Pokharel

Tek Chandra jee

Thanks a lot for your comments. This is a strange kind of corruption. Nepal is losing Rs 4 billion in a year in just royalties. This can be termed direct cash loss. But the magnitude of other losses is higher by a magnitude. The loss (1) due to lack of industrialization as Nepal is starved for power, (2) the loss due to lack of employment (just imagine how much Nepal’s treasury would have earned by way of income tax if industries would have hired people in Nepal itself, etc. and how much VAT would these people have paid by buying things in Nepal for their consumption) and (4) most importantly the loss due to migration of youth in search of employment which could have significantly contributed to Nepal’s economy if they were working for Nepal instead of being exploited in some foreign countries. But there are absolutely few people thinking about such things. Some people are busy pedaling licenses and some people are busy looking at electricity market in India, failing to notice the market in Nepal which is starved for power.

I like your sentiment with regard to raising this issue in a big way in public. Let’s try to do this. However, you are aware that the business community also deserves to be largely blamed for this. Some business people have hoarded licenses and are busy pedaling licenses in the name of looking for “investors” and others are going about pontificating that Nepal can become rich by exporting power; which my analyses prove to be hogwash and have prove it beyond reasonable doubt (also written several articles on this topic).

However, I, in a convoluted sort of way, don’t blame the business people for the mess. Because it is sort of normal for them to take advantage of (make profit from) legal provisions and even them exploiting loopholes in the body of law is deemed normal business. It only becomes criminal when they go beyond exploiting the loopholes in the law and do things like misappropriating value added tax that they have collected on behalf of government from their customers. The situation obtaining in Nepal is so pathetic that the businesspeople indulging in VAT misappropriation, which is tantamount to daylight robbery, are going about pontificating about honesty, integrity, etc. making one feel bad for being honest and maintaining one’s integrity.
To conclude, it is the responsibility of legislature, executive and judiciary to, respectively, frame law with least minimum loopholes, to administer the body of law such that businesspeople don’t misuse the law (beyond exploiting loopholes in the law) and to see to it that legislature and executive are not overstepping and providing negative incentive to businesspeople to indulge/encourage in corruption. But none of the three arms of governance is doing (mostly) what they should be doing.

The law regarding licenses for hydropower epitomizes the mess we have. This article of mine throws light on the loopholes in this law and recommends what needs to be done to strengthen it such that people hoarding licensees don’t sit on it expecting such licenses to “hatch”. Do please spread this important message around. Thanks.
With best regards,

Ratna Sansar Shrestha, FCA
Senior Water Resource Analyst

From: Tek C. Pokharel []

Sent: Tuesday, September 6, 2011 11:44

To: 'Ratna Sansar Shrestha'

Subject: RE: Article on "license management procedure"

Dear Ratna Sansar ji,

Thanks for your very enlightening article on corruption in licensing procedure that is causing the nation loss in billions or trillions of rupees. Why can’t we raise the issue in a big way in public; might be as a day of protest to mobilize public opinion.

Tek C. Pokharel

Dear Colleague
I have written an article on the captioned subject which was published in today’s Kantipur.

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