Citizens Forced Into Embossed Plates as Contractor Compensation Deadline Nears

Kathmandu: The government has been pushing vehicle owners to install embossed number plates after the risk of paying hefty compensation to contractors increased. The step comes after Decatur-Tiger IT, the company contracted to supply the plates, could claim 95 percent compensation for the remaining units if it fails to install 2.5 million embossed number plates by November 27.

With the contract deadline approaching, a meeting of the thematic committee chaired by Minister for Physical Infrastructure and Transport Devendra Dahal on August 5 abruptly decided to make embossed number plates mandatory for all vehicle registrations, transfers, and renewals starting from mid-September.

Since these are unavoidable procedures for vehicle owners, they are effectively being forced to adopt embossed plates. Transport officials, accused of pushing the controversial “Safeland” project, are attempting to avoid the risk of compensation. The move, however, has drawn widespread opposition.

Controversial Contract and Legal Basis

The contract was structured in such a way that it favored the vendor over the government even before the tender was issued. The legal foundation for embossed number plates was laid through the third amendment to the Vehicle and Transport Management Regulations, 2054 on May 10, 2010, before Nepal adopted federalism.

The government announced digital number plates in point 92 of the 2072/73 budget statement, after which the Department of Transport Management (DoTM) was directed to proceed with procurement. On 30 May, 2016, the government signed an agreement with Decatur-Tiger IT to produce 2.5 million embossed plates within five years at a cost of USD 43.7 million.

Initially, efforts were made to keep “zones” on the plates even as the country moved toward a federal structure. Following public backlash, the DoTM agreed to redesign plates with provincial names. However, as provincial names had not been finalized, disputes resurfaced and distribution stalled.

The plan was designed so that the cost of plates would be borne by the public, not the state. While the agreement set prices at USD 14.50 (Rs 1,550) for two-wheelers, USD 17.50 (Rs 1,873) for three-wheelers, USD 17.70 (Rs 1,894) for small/medium four-wheelers, and USD 19 (Rs 2,033) for large vehicles, the government has been charging much higher: Rs 2,500, Rs 2,900, Rs 3,200, and Rs 3,600, respectively. In this way, the state secured profit on every plate.

Risk of Compensation and Extension of Deadline

The project has become so entangled that the government, now stuck in its own arrangement, is trying to force citizens to comply. According to DoTM Director Shrikant Yadav, only 91,000 embossed plates have been installed so far, leaving more than 2.49 million pending.

Under the agreement, if plates are not installed within the deadline, the department must bear 95 percent of the contract amount per plate, with the remaining 5 percent taxed at source.

Despite strong resistance from the public, the government has tied embossed plate installation to compulsory services like registration, renewal, and transfer from September, effectively trapping vehicle owners. The move is seen as an attempt to shield the government from massive payouts to the contractor.

With only three months left in the contract, installing the remaining plates is nearly impossible. Officials admit that the department has failed for 10 years to implement the plan due to opposition over high fees, use of English instead of Nepali, and lack of infrastructure.

Contractor Decatur-Tiger IT argued that including Nepali Devanagari script would cost an extra Rs 770 million, leading to English-only plates, a decision that further inflamed opposition.

DoTM officials now appear to be banking on an extension. “It is not possible to install all 2.5 million plates by Mangsir. The department will likely extend the contract period, as the vendor itself has not produced 2.5 million plates. Both sides are compelled to agree to an extension,” an official said.

So far, Decatur-Tiger IT has printed 800,000 plates, with another 400,000 in production, leaving 1.3 million still pending. The department claims that since the vendor has failed to meet its obligations, extending the deadline is also favorable to the company.

Government Secured Profit in Every Plate

Instead of reducing costs for citizens, the government ensured profit margins similar to private traders. Based on Nepal Rastra Bank’s rate of Rs 107 per dollar in 30 May 2016, the cost of a two-wheeler plate should have been around Rs 1,550, but the public is being charged Rs 2,500.

The agreement required 1.84 million plates for two-wheelers, 10,000 for three-wheelers, 350,000 for small/medium four-wheelers, and 300,000 for large vehicles. The contract was signed by Chandraman Shrestha on behalf of Nepal and Michael Goffin, president of Decatur Industries Inc., on behalf of the vendor.

 

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