Nepal Government Introduces First Comprehensive Legal Framework for Ride-Sharing Services

Kathmandu. After years of legal ambiguity and controversy, the Government of Nepal has prepared its first detailed legal framework to make the ride-sharing sector organized and dignified.

The Ministry of Physical Infrastructure and Transport has released a draft of the 'Digital Mobility Service Operation Standards, 2082,' which aims to fully regulate transport services operating through apps like Pathao and inDrive.

The Ministry stated that these standards were introduced to connect entrepreneurship and economic prosperity in the transport sector, ensure reliable service according to established safety norms, and implement the Supreme Court's orders.

The Ministry has invited suggestions from stakeholders and the public on this detailed draft within seven days, which will be incorporated to finalize the standards. It is believed that once these rules are implemented, Nepal's ride-sharing business will become dignified, safe, and legally organized.

According to the draft, two-wheelers will be allowed to charge a maximum of 25 rupees per kilometer, and four-wheelers will be allowed to charge 55 rupees. However, a provision has been made that regardless of how short the trip is, the passenger must pay a base fare equivalent to a minimum distance of 2 kilometers, which the government believes will ensure the interests of both short-distance passengers and drivers.

Departmental Approval Required for Service Operation

Under the proposed standards, all digital mobility companies must register with the Department of Transport Management and obtain an operating permit. Conditions include that the company's app must be hosted on a Nepali server, data security must be ensured, and it must be mandatorily connected to the department's central system (API).

Vehicles used in the service will be considered public transport, and 'Digital Mobility Service' must be specified in the registration book (Bluebook). Annual renewal of the vehicle must be done according to provincial laws. For part-time drivers providing service up to four times a day, specifying the vehicle's purpose is not mandatory, but a QR sticker must be displayed. This will facilitate government monitoring and regulation of the service.

QR Code Mandatory, Renewal Required After 1 Year

According to the new standards, it is mandatory for vehicles involved in digital mobility services to display a sticker with a QR code for distinct and specific identification. The service provider company will be primarily responsible for preparing and distributing such stickers based on the special design and safety standards determined by the Department of Transport Management.

Technical arrangements must be made so that this QR code can only be scanned and checked by passengers, traffic police, and authorized officials of regulatory bodies. The QR code will securely contain important information such as the service provider's name, operating permit number, full technical details of the vehicle, as well as the driver's name, photo, and license validity period.

This technology will be very reliable for passenger safety, as the driver's authenticity and the vehicle's insurance status can be verified immediately upon scanning the code. Additionally, the digital mobility app must mandatorily have an emergency 'SOS' button, which will immediately inform the company's control room and the nearest police station in case of accidents or other risks.

Service providers are legally obligated to operate a 24-hour grievance hearing and emergency rescue cell for their customers. Keeping gender sensitivity in mind, the app must ensure the option for female passengers to choose female drivers whenever possible.

The validity period of a QR sticker once issued will be one year. Part-time service vehicles must pay an annual service affiliation fee of 1,000 rupees for two-wheelers and 5,000 rupees for four-wheelers into the Federal Consolidated Fund. However, this fee will not apply to pure ride-sharing. Service provider companies are obligated to collect such fees while distributing QR stickers and deposit them into the government fund by the end of Chaitra each year.

Vehicle Quality Standards

Strict arrangements have also been made in the draft for vehicle quality and safety. For two-wheelers, both the driver and passenger must mandatorily wear helmets according to standards, and drivers must wear reflective jackets during night service.

For four-wheelers, a dashcam, first-aid kit, fire extinguisher, and central locking system have been made mandatory. For electric vehicles, the draft includes a provision to obtain a certificate of annual battery inspection and high-voltage safety testing.

It is mentioned that the quality of two-wheelers used in digital mobility services via ride-hailing must not exceed 15 years from the date of manufacture. Also, for internal combustion engine vehicles, they must be within the pollution standards set by the government for public transport. For electric vehicles, the motor's peak power must be at least 1.5 kW and the maximum speed must be more than 40 kilometers per hour.

It is mentioned that the quality of four-wheelers used in digital mobility services via ride-hailing must not exceed 15 years from the date of manufacture. For internal combustion engine vehicles, they must be within the pollution standards set by the government for public transport. For electric vehicles, the motor's peak power must be 40 kW or more.

Similarly, the boot space must be at least 200 liters, and service providers must ensure that vehicles used in digital mobility services meet these standards before onboarding them.

Driver Eligibility: 18 Years

The government has also proposed regulations on driver eligibility and working hours for this service. To be a driver, one must be at least 18 years old and have held a driver's license for at least one year. To reduce accidents caused by fatigue, drivers will only be allowed to log in to the app and provide service for a maximum of 12 hours a day.

Drivers must take a three-day orientation training before starting service and refresher training every four months. If a driver misbehaves with a passenger or violates safety rules, the company must immediately 'digitally block' and remove them from the service.

Accident Fund, Insurance Up to 1 Million Rupees

The draft proposes an 'Accident Fund' for the benefit of drivers and passengers. One percent of the total fare from each trip must be deducted and deposited into this fund. It is proposed to provide compensation of up to 1 million rupees to the families of drivers or passengers who die or are permanently disabled in an accident, and a provision of up to 100,000 rupees has been made for the treatment of the injured. Additionally, service provider companies must mandatorily enroll all their workers and drivers in the Social Security Fund.

How to Regulate and Manage?

The Department of Transport Management will build and manage a central system for the operation and management of digital mobility services. It is mentioned that the system should include provisions for connecting the apps used by service providers via API, granting operating permits, regulating app operations and transactions, and addressing consumer grievances.

Service providers must create easy user access for users to allow direct monitoring from the central system. When creating user access, a user ID with a password must be provided to identify every person using the app.

The proposed new standards have organized and made transparent the ride-sharing fares and commissions. Now, service providers must make the fare clearly visible in the app based on distance, within the limits set by the Federal or Provincial government.

The maximum fare limit is set at 25 rupees per kilometer for two-wheelers and 55 rupees for four-wheelers. Regardless of how short the trip is, the passenger must pay a base fare equivalent to a minimum distance of 2 kilometers. However, for night service, adverse weather, or waiting time management, a provision has been made to charge a maximum of 20 percent additional fee on the base fare.

The service fee or commission taken by the company has also been tightened. Companies that only operate the app will be allowed to keep a maximum of 10 percent commission of the total fare collected from passengers, while the remaining 90 percent will be received by the driver or vehicle owner.

If the service provider manages the vehicles and drivers themselves, they must ensure the minimum wage for drivers as per the Labor Act, 2074. Additionally, if they work more than the prescribed working hours, additional remuneration must be provided proportionally.

It has been clarified in the standards that all types of agreements between service providers, vehicle owners, and drivers must be within the scope of prevailing laws and the Labor Act. This aims to maintain the fair value of the driver's labor and transparency in the passenger's expenses.