US Embassy's Influence Paves Way for CSG in Nepal Telecom

In a significant development for Nepal’s IT and telecom sector, an American company is set to take over the billing system of Nepal Telecom, marking a pivotal shift in the company’s operational dynamics. The American company CSG is the sole bidder for Nepal Telecom’s critical and sensitive billing contract, a first for the Nepalese telecom giant.

Exclusive Bid from CSG

As the bidding deadline closed on Tuesday, only CSG had submitted a proposal for the billing contract. Nepal Telecom will now proceed with a thorough review of the technical and financial aspects of the proposal before approving the contract. Should the contract be awarded to CSG, a short protest notice period will follow, allowing other companies to raise any objections.

If no objections arise, CSG will officially receive the contract. This marks the first time a Chinese company has been excluded from a Nepal Telecom contract, with local representation for CSG being handled by Gorkha Thapa.

US Embassy’s Involvement

The US Embassy has long expressed dissatisfaction with the prevalence of Chinese companies within Nepal Telecom’s infrastructure. Concerns were raised particularly about the presence of technicians from Chinese company Huawei. The embassy’s discontent stems from the broader geopolitical tensions and cybersecurity concerns associated with Chinese telecom companies.

Historical Dominance of Chinese Companies

Historically, Chinese companies have consistently won Nepal Telecom contracts due to a bidding system that favored the lowest bids. Sources indicate that the US Embassy has been actively working to ensure that CSG secures the billing contract, highlighting the strategic importance of this shift.

Investment and Technical Details

Nepal Telecom issued the contract to install a new billing system, with an estimated investment of approximately NPR 4.67 billion. The decision to choose an American company over a Chinese one is significant, especially given the technical backbone of Nepal Telecom’s billing system.

Technical Backbone: Oracle’s Role

Nepal Telecom has been using American computer software company Oracle for its overall billing system. The necessary servers for Telecom billing are installed by Oracle. “Telecom has large servers from Oracle for billing. Oracle’s extensive system is operating within Telecom,” a Telecom source confirmed.

Legislative Context and Huawei’s Exclusion

Three years ago, US President Joe Biden signed a law aimed at distancing American companies from Chinese companies like Huawei and ZTE. The Secure Equipment Act imposed stricter regulations on Chinese telecom and tech companies, prohibiting their integration into any US communication network. This law has also influenced American companies to avoid integrating Chinese companies into their operations in other countries. This could explain why Huawei did not submit a bid for the billing contract, speculated a Telecom employee.

Controversies and Challenges in the Contract Award Process

The billing system contract for Nepal Telecom has been mired in controversy from the start. The deadline for the contract, extended four times, finally closed on Tuesday. On Chaitra 18 of the previous year, Nepal Telecom first issued a notice for the procurement of the billing system. The bid notice set the dollar exchange rate at NPR 118, the rate from four years ago, while the current exchange rate hovers around NPR 134.

Long-standing Issues with the Existing System

For the past decade, Nepal Telecom has been using a billing system from Chinese company AsiaInfo. Revenue leaks of up to 11% were discovered due to the outdated and non-competitive billing system. Consequently, Nepal Telecom has been seeking a new system for the past five to seven years.

Despite directives from the Public Procurement Monitoring Office to rectify errors in the billing contract, Nepal Telecom has been extending the deadline instead of making necessary corrections. The office issued a directive on Baisakh 30 to rectify the contract issued at outdated rates, but Nepal Telecom chose to extend the deadline instead of amending the contract.

Persistent Efforts to Maintain the Status Quo

The decision to replace the old billing system with a new one was initially made during the tenure of former Managing Director Dilliraj Adhikari. During his tenure, a decision was made to proceed with a new billing system contract worth USD 35 million. However, his term ended shortly after the decision.

Sunil Paudel succeeded Adhikari as the Managing Director of Telecom. When he assumed office, only three months remained on the old billing system contract. Citing that the contract process and data migration would take more than two years, he continued with the old company, AsiaInfo.

Corruption Investigations and Forced Changes

Following suspicions of corruption in the decision to continue with AsiaInfo for Telecom billing, the Commission for the Investigation of Abuse of Authority (CIAA) began an investigation. The CIAA pressured Nepal Telecom to issue the tender for the new billing system, which had been pending for four years. Unable to withstand the pressure from the CIAA, Nepal Telecom was compelled to issue the tender for the new billing system.

This development signifies a strategic shift in Nepal’s IT and telecom sector, reflecting broader geopolitical influences and a move towards greater transparency and efficiency in Nepal Telecom’s operations.