On March 4th, 2022, liberty discussion was conducted on the article titled “रोयल्टी वितरणमा असमानताः स्थानियतह बिच बद्दो खाडल” authored by Bhim Gautam for The Center for Investigative Journalism (CIJ). The article connoted that there is stark fiscal inequity and discrimination regarding sharing of royalty among local and provincial governments of Nepal. As such, while some local municipalities are receiving royalty distribution equivalent to their total budget, others are not even receiving a penny from the use of natural resources enlisted in the Intergovernmental Fiscal Arrangement Act, 2017.
The participants recognized that although natural resource revenue accounts for very less in proportion to national GDP and government revenue, it seems to account very much for the local governments. Hence, the derivation-based sharing system of revenue of royalty may not be very equitable and effective in sharing of resource revenue. Hence, an indicator-based system that acknowledges the fiscal situation and needs of the local government should be a method for distributing royalty revenue. If possible partial equalization method that provides an arrangement for both derivation and indicator-based sharing system must be applied. Of course, the derivation-based redistribution system between local and provincial governments needs to be rethought and made more encompassing.
The participants also discussed that royalty sharing arrangements for the utilization of water resources other than electricity generation should also be developed. Given that irrigation and drinking water projects that consume water are being substantially planned by the federal government.