Off the Record 128: Hailing rides in Kathmandu

Issue 127 • 09 February 2024

It’s February 9, 2024, and you’re reading Off the Record.

I’m Pranaya Rana and in this newsletter, we’ll stop, take a deep breath, and dive into one singular issue that defined the past week. 

You can read Off the Record for free by visiting this link and subscribing to receive this newsletter in your inbox every Friday.ﾠAll posts are free but you can pledge a subscription if you like my work.

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Good morning, good afternoon, and good evening from Kathmandu. It’s been a slow week for the news but we must continue as usual. Before we begin, a shoutout to my two new paid subscribers — Katrina Edwards and Pragya Silwal — and my 40 new free subscribers! Great to see ya’ll helping me keep the momentum going. I also received one payment for Rs 1,000 and one payment for Rs 10,000 over eSewa but there was no note or name attached to either. Please reach out to me so I can thank you in person and provide you with your paid subscription. Thank you so much! We’re almost at 3,000!

Now, let’s get into it.

Ichchha Raj Tamang jailed

Looks like it is open season on Nepal’s vaunted ‘industrialists’ and businessmen. Last week, Arun Chaudhary of the infamous Chaudhary Group was taken into custody for his role in the Bansbari land scam. He’s now been let go and it appears that the Nepali Congress, very likely at billionaire Member of Parliament Binod Chaudhary’s bidding, is pulling out all the stops to save Arun. This week, on Sunday, yet another businessman and former Member of Parliament, Ichchha Raj Tamang was sentenced to three years in jail along with a Rs 1.72 billion fine for money laundering. Tamang had been convicted in January by the Special Court for embezzling money from his Civil Savings and Credit Cooperatives. Tamang was behind popular ventures such as Civil Homes and Civil Bank and was once hailed as a visionary businessman. It seems like he was no better than anyone else, embezzling money from ordinary Nepalis to fund his many other investments.

Kantipur still hasn’t paid its employees

On Thursday, February 8, Kantipur Publications, Nepal’s largest media house, launched a high-profile event at the Hotel Radisson called the ‘Kantipur Employment, Migration and Remit Summit’. The event was attended by Members of Parliament, politicians, governors, and businesspersons, all discussing employment and migration. Meanwhile, outside the premises of the Radisson Hotel, a handful of journalists were holding up placards demanding that Kantipur pay what they are owed. According to the journalists, they haven’t been paid for over three months now. Quite ironic, wouldn’t you say? Shout out also to the World Bank for partnering and possibly funding Kantipur’s employment summit even as actual working journalists protest for what they are owed.

Hundreds, maybe thousands, of Nepalis allegedly fighting in Russia

Nepalis who joined Russia’s ‘special military operation’ in Ukraine are now returning home with dire warnings for those looking to do the same. War is hell, they’re saying, something many others could’ve told them before they actually joined up hoping for easy money. They’re also saying that the current official numbers — over 200 — vastly underestimate the number of Nepalis in Russia. These returnees claim the number is between 2,500 and 3,000 while Bhadra Sharma, Nepali correspondent for the New York Times, places that number even higher at around 16,000. Sharma also claims that over 400 Nepalis have died in the war even though the official government number is 12. It should be said, however, that there isn’t anything to substantiate Sharma’s numbers. He’s not reporting, just speaking off-hand on Twitter. I do believe that certainly over 12 Nepalis have died but I am skeptical that it is as high as 400. If that were true, there would many more families hounding the Nepal government. So far, only about 100 families have lodged complaints with the government asking for their children to be returned home.

Nepal is toothless here. It can neither prevent Nepalis from flying to join Russia through third countries nor can it prevent Russia from enlisting Nepalis who show up to join. Foreign Minister NP Saud has pleaded with both the Russian Ambassador to Nepal Alexei Novikov and Russian Deputy Foreign Minister Sergey Vershinin, whom he met at the Non-Aligned Movement summit in Kampala in January, to halt the recruitment of Nepalis. Neither promised anything and Russia does not seem to have turned away any able-bodied person who wants to join their war. Although, Vershinin apparently told Saud that Russia would compensate the families of those who died in the war.

An Austrian architect dies in his adopted home

Götz Hagmüller, the Austrian architect behind the conservation of some of the Kathmandu Valley’s most iconic structures, died on February 2. (I should’ve mentioned this in last week’s newsletter but it slipped my mind.) Hagmüller helped restore the Garden of Dreams in Thamel and the Patan Museum in Patan Durbar Square, both among the most visited sites in the Valley. Hagmüller didn’t just restore the architecture of these spaces though; he helped turn them into living spaces that welcomed visitors not just with their aesthetic but also a sense of serene calm amidst the chaos of the city. Hagmüller came to Nepal in 1979 to work in Bhaktapur and ended up spending the rest of his life there, turning an old falcha into a home for himself. Hagmüller was awarded the Gorkha Dakshin Bahu by king Birendra in 2001 but his work went largely unrecognized by subsequent governments. If there was anyone who deserved honorary Nepali citizenship — in addition to Fr. Casper Miller — it was Götz Hagmüller.

And I think that’s pretty much it for this week. Enjoy the deep dive and I’ll see you next week!

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The deep dive: Hailing rides in Kathmandu

Image: Dall-E/Bing AI

On February 1, the Nepal government officially legalized ride-hailing services in Nepal, amending the Industrial Enterprises Act. With this amendment, the provinces can now draft specific legislation and guidelines to regulate the services that have been operating in limbo for nearly seven years now. Bagmati Province, home to Nepal’s capital city of Kathmandu, is reportedly in the final stages of drafting legislation for services like Tootle, Pathao, and InDrive.

For seven years now, Kathmandu residents have been using these ride-hailing services without any legal framework, leaving both customers and drivers in the lurch when something goes wrong. On the one hand, they’ve made life much easier for Kathmandu residents but on the other, they’re operating in pretty much lawless territory with no oversight or regulation. So this deep dive, let’s take a look at ride-hailing services, how they came about, and where they are right now.

It was 2015, one of the worst years for Nepal. First, in April-May, there were twin earthquakes that killed thousands of people and destroyed much infrastructure. Then, in September, India, upset with the new constitution, enforced an unofficial blockade on Nepal, crippling the country. For six months, up until March the next year, life in Nepal ground to a halt as petroleum products, food, medication, and even earthquake relief material were stopped at the border and not allowed to pass. It was a dismal time. The streets were empty of vehicles and we were instead forced to walk everywhere. It was at this time that Sumana Shrestha, the first-time Member of Parliament who is currently setting a new standard for parliamentarians, came up with the idea of sharing rides. She called it Carpool Kathmandu and launched it as a Facebook page where those with access to fuel and vehicles could offer seats to people going the same way. The page quickly grew by the thousands as the city got its first taste of ride-sharing.

Then, the blockade was lifted in March 2016 and everyone went back to riding around in their vehicles. But the success of Carpool Kathmandu had triggered ideas in a few entrepreneurs. A year later, in 2017, Sixit Bhatta announced the launch of Tootle, a service where Nepalis with motorbikes could sign up to become part-time drivers to ferry passengers across Kathmandu. It wasn’t technically a ride-share since the drivers wouldn’t just be picking up people on their route but rather more like Uber, where passengers could request a ride and drivers would pick and drop them off. Bhatta smartly chose motorbikes since these two-wheelers are much more ubiquitous than cars in Kathmandu. Cars are more of a luxury and people were less willing to allow strangers into their vehicles that cost millions.

Tootle came as a boon for Kathmandu residents. The city’s public vehicles — tempos, buses, and microbuses — have always been a mess. They are crowded and unreliable. The drivers are reckless and make unscheduled stops any and everywhere, taking up valuable time. During rush hour and nighttime, things are even worse. The buses are either filled with passengers shoved inside like gundruk in a jar or else, they just don’t come. Taxis, although more personalized and reliable, were notoriously expensive and almost always necessitated getting into a feverish haggle with the driver over prices. No taxis ever went anywhere on the meter, despite the government having raised prices time and again. The complaint was always that fuel had gotten expensive and they couldn’t afford to go on the meter. They overcharged you and you paid for it often because you had no choice.

Tootle provided a service that many in Kathmandu were looking for — a way to get to where they’re going cheaply and easily. So many of us who don’t own vehicles were overjoyed. Tootle meant you didn’t have to worry about catching the last bus home or paying through your nose for a cab ride. A man on a motorbike came to pick you up from where you were and dropped you off to where you wanted to go, all for a fraction of the price of a taxi. Tootle got so popular that its regular customers began to use it as a verb, ‘I’m Tootling,’ we’d say.

But with success comes competition. Bhatta wasn’t the only entrepreneur inspired by Carpool Kathmandu. A year later, in September 2018, Asheem Man Singh Basnyat would bring Pathao to Nepal. For Pathao, a Bangladeshi company, Nepal was its first foray outside of its home country and it came in very aggressive. When it first launched, Pathao offered massive discounts, sometimes the entire fare, to customers. Its pricing was also much lower than Tootle’s and it used a better GPS. Very quickly, Pathao managed to poach a large portion of Tootle’s user base, becoming the biggest game in town.

Both Tootle and Pathao were very popular with customers but they also fulfilled one of Nepal’s greatest needs — employment. For thousands of young Nepalis, especially college students and the unemployed, ride-hailing apps were an easy way to make some cash. Both services took about a 20% cut from the fare but even with just 10 rides, at Rs 100 on average, the rider could make Rs 800 a day. Not terrible compensation for a few hours’ work. Even for the employed, a quick ride or two after work could bring them enough cash to pay for the day’s tank of petrol.

But, there were issues. One of which was harassment. Some of the overwhelmingly male drivers began to overstep boundaries with their female, especially young women, customers. There were reports of unwanted messaging from drivers, social media friend requests, and even stalking. Pathao and Tootle both said that they addressed such incidents by blocking the driver and initiating an investigation. Both services also had a rating system where customers could evaluate their experience with the driver, and vice-versa. Such incidents appear to have reduced of late but given how much the volume of rides has increased since then, there are certainly at least some cases.

All the while, the government was caught largely unawares. It had not anticipated such services and thus there were no laws, rules, or guidelines for the operation of Pathao and Tootle. The state wasn’t even sure how to tax them. And so, the government did what it always does when it doesn’t understand something — bans them. In November 2019, ride-hailing services were declared illegal based on the Motor Vehicles and Transport Management Act, which states that privately registered vehicles with red plates cannot provide public transport services (black plate). The police cracked on drivers and customers but the public was not going to take this lying down. Pathao and Tootle had become essential parts of daily life by eliminating the need to indulge in bothersome and often more expensive. There was a mass public outcry and the government was forced to withdraw its decision. It then announced that it would craft a new policy to regulate ride-hailing services. That was almost five years ago and it still hasn’t happened.

As these apps became more popular, the transport industry too began to take notice. Taxi drivers had long been peeved at Pathao and Tootle for taking away most of their business. If you could easily take a ride on the back of a motorbike, even during rush hours and at night, for just about a hundred rupees, why would you haggle with a taxi driver and still end up paying around five hundred for the same ride? So the taxi drivers too did what they’ve done in the past — attack drivers and go on strike. But just like the government, the taxis were also forced to back down after public pressure. They saw which way the wind was blowing and decided to join them since they couldn’t beat them. Pathao and Tootle both now offered taxi rides too, at cheaper rates than hailing one off the street.

There could, however, only be one winner and Pathao came through where Tootle stumbled. Tootle’s app was not as optimized as Pathao’s, which came with a much more sophisticated backend. There were frequent crashes and its mapping system was often wonky. Pathao was smoother and used Google Maps, which was much more reliable. Tootle’s market share declined considerably as most customers and drivers moved over to Pathao. Tootle’s last ditch effort was to brand itself as a homegrown app, even displaying a ‘Made in Nepal’ tag on its home screen. But customers were just not willing to support a subpar app, even if it was Nepali.

Pathao used its market dominance to diversify, offering courier services and food delivery. It also instituted a new surcharge for passenger insurance which had long been a demand from both drivers and passengers due to the inherent madness of Kathmandu’s streets. I’m sure the insurance has helped people but the surcharge bumped up prices. But since Pathao was so dominant, we customers had no choice but to go along with it.

Disruption is always around the corner, though. In 2022 arrived InDrive, a Russian ride-hailing service, that offered a unique twist on the established model. Where Pathao and Tootle offered fixed rates calculated by distance, InDrive provided a ‘suggested’ rate and allowed both drivers and passengers to reduce or increase the fare. It was basically digital haggling. But InDrive also offered much cheaper base rates, since it did not take any commission from its drivers. And customers, always looking to save a few rupees, began to jump ship. InDrive posed a significant challenge to Pathao and, although I don’t have the numbers, might now be the market leader. However, both these services have yet to expand significantly outside of Kathmandu.

Ride-hailing has now become an integral part of living in Kathmandu. It arrived at just the right time and fulfilled a need that everyone had. Now that’s here, it is not going away. Pathao still exists and appears to be doing well but not as well as it was doing during its heyday in 2020-21. After a hiatus of a few years, Tootle, in September 2023, relaunched under new management. It’s now called ‘Tootle by Zapp’ with Zapp being a courier company, apparently. It does not appear to have close to anywhere near the popularity it once did. Tootle founder Sixit Bhatta was also in the news recently after briefly being arrested for copyright infringement. InDrive seems to be doing best of all, offering rides, couriers, and even long-haul services. But InDrive does not have offices in Nepal and customer issues mostly go unheard. There’s no local complaint number with customers instead directed to email. Also, it will eventually begin taking commissions from its drivers, which is certain to then level the playing field a bit more with Pathao. Currently, the significantly cheaper rates are just too much of a draw.

I use InDrive and Pathao regularly. They’ve spoiled me in many ways. I used to take public transport, and despite the discomfort, there was always something interesting about it. I don’t anymore. Ride-hailing is just so much easier. I’ve met many interesting drivers, mostly because they tell me their stories. Most are young people doing it as a side gig, students making some pocket money, or unemployed folks waiting for their papers to come in before they can go abroad. It’s like meeting a microcosm of Kathmandu’s young male population. Most of the conversations we have are pessimistic and sad, showing just how disillusioned young people are with this country. Just the other day, a driver, just 25 years of age, told me how he constantly thought of suicide and was very depressed. I acted as a counselor on the 20-minute ride. I hope he is well.

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That’s all for this week. I will be back next Friday, in your emails, for the next edition of Off the Record.

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