End of the Transport Syndicate (2018): Route Permits and the Fight to Break the Cartel

In Nepal, the word 'syndicate' (sindiket) came to describe an informal but powerful cartel in public road transport. Groups of bus and micro owners banded together into 'committees' (samiti) or associations for each route or district. Each committee effectively controlled the route permits on its corridor, decided how many vehicles could operate, set departure turns and fares, and, crucially, decided who was allowed to join. Anyone wishing to run a bus on a syndicate-controlled route generally had to be admitted by the committee first, not simply obtain a permit from the state.

This gatekeeping was the defining feature of the system. Because a new operator could not get a route permit or run a service without the committee's blessing, the committees functioned as private licensing bodies sitting between the government and the market. Reporting from the period noted that buying into a committee could cost at least Rs 1 million (Rs 10 lakh) in some routes, on top of the vehicle itself. The barrier kept competition out, protected the value of existing permits, and, critics argued, let ageing vehicles and poor service persist because customers had few alternatives.

Supporters described the committees differently: as self-regulating welfare bodies that organised schedules, maintained turn systems and looked after members during accidents or disputes. This dual character, part welfare association and part entry cartel, is why the 2018 fight was genuinely contested rather than a simple story of good versus bad.

A route permit (rut permit) is the government authorisation, issued by the Department of Transport Management (DoTM) under the Ministry of Physical Infrastructure and Transport, allowing a specific vehicle to carry passengers or goods on a defined route. On paper the permit is a public regulatory instrument. In practice, for decades the DoTM's own Transport Management Directives required an applicant for a new permit to submit a recommendation (sifaris) from the existing committee or association on that route.

That single procedural requirement was the legal hinge of the syndicate. Because the incumbents controlled the recommendation, they could simply refuse it to any newcomer who threatened their share, and the state would then decline the permit for lack of paperwork. The rule turned a public licence into something the cartel could veto. The committees themselves were usually registered not as businesses but as non-profit associations under the Associations Registration Act, 2034 (1977), whose certificates are renewed by the Chief District Officer (CDO), a detail that would later matter in court.

The reform therefore did not need to abolish route permits; it needed to change who stood between the applicant and the permit. On 1 April 2018 (Chaitra 2074 BS) the government amended the Transport Management Directives, 2004 (2061 BS) to remove the committee-recommendation requirement and instead make registration as a company under the Companies Act the condition for obtaining a new route permit or extending an operator onto a new route.

The push accelerated in early 2018 under Prime Minister KP Sharma Oli. The government's core argument was legal: committees and associations had no standing to run commercial transport or to gatekeep permits, and operators should instead form companies that answer to the Companies Act, 2063 (2006). To break the veto, the Cabinet decided that transport committees and associations would no longer be renewed or newly registered, effectively making them illegal from the new fiscal year, and directed operators to register as companies by 17 July 2018 (end of FY 2074/75).

Enforcement was unusually forceful for a market reform. After committees resisted, and after a new operator's bus was torched on the Kathmandu-Banepa corridor early in 2018, the state moved against both people and money. Police arrested at least 106 transport entrepreneurs, including senior leaders of the Federation of Nepalese National Transport Entrepreneurs (FNNTE), and the Nepal Rastra Bank (NRB) froze 245 bank accounts linked to the committees. The government simultaneously issued direct route permits to new companies such as Sajha Yatayat, Mayur Yatayat, City Metro and others to demonstrate that outsiders could now enter.

The reform had visible early results. Between 1 April and 17 July 2018 some 282 new transport companies were registered, lifting the total number of registered transport companies to around 922. For commuters and would-be operators, this was presented as the formal end of committee control over who could run a bus.

The arrests and account freezes triggered an indefinite transport strike, and the standoff was resolved through negotiation at the Transport Ministry in Kathmandu on 6-7 May 2018. Transport Minister Raghubir Mahaseth led the government side, and jailed federation leaders, including FNNTE president Yogendra Nath Karmacharya, were released as the deal took shape. The result was a five-point agreement widely reported as ending, on paper, decades of syndicate practice.

The five points committed the operators to end all forms of syndicate in public transport and to run their businesses as companies; allowed individuals to enter the sector with even a single vehicle, replacing an earlier expectation of a minimum fleet; created a task force of ministry secretaries, experts and operator representatives to recommend, within about a month, how to standardise the sector; provided for a probe committee in line with the Supreme Court's earlier mandamus on the syndicate; and secured the withdrawal of all protest programmes.

The agreement was celebrated at the time, but analysts and reform advocates such as the Samriddhi Foundation cautioned that the deal's promise depended entirely on follow-through. If the committees simply re-badged themselves as companies while keeping the same turn systems and entry controls, the cartel could survive under a new legal costume. That skepticism proved well founded in the years that followed.

Moving from an association to a company was not a cosmetic change. Under the Associations Registration Act, 2034, committees were non-profit bodies overseen by the CDO. Under the Companies Act, 2063 (which came into force on 6 October 2006), they would become for-profit companies subject to the Office of the Company Registrar, mandatory audits, corporate tax and clearer liability. Many operators objected that this exposed their finances and turn-based earnings to scrutiny they had never faced.

A specific technical obstacle was the shareholder ceiling. A private company under the Companies Act is limited to roughly 101 shareholders, yet large route committees often had far more members, sometimes hundreds of owners on a single busy corridor. Squeezing every member into one private company was legally impossible, forcing committees to split, form multiple companies, or convert to public-company structures with heavier compliance. This friction, plus limited administrative preparation, slowed conversions dramatically.

Because of that slow uptake, the 17 July 2018 deadline was extended. In December 2018 the government pushed the deadline to mid-March 2019, and even then, only a small fraction of vehicles had converted: reporting put registered public vehicles at around 7,000 by late 2018 against a federation claim of close to 300,000 associated vehicles nationwide. The gap showed how deep the old structure ran and how far implementation lagged behind the headline reform.

The syndicate had been a legal target long before 2018. Acting on a writ associated with advocate Jyoti Baniya, the Supreme Court had in 2011 issued a directive (mandamus) ordering the government to dismantle the transport syndicate, an order that went largely unenforced for years and was one reason the 2018 five-point deal promised a fresh probe committee. Competition law also framed the issue: syndicate-style market allocation runs against the Competition Promotion and Market Protection Act, 2063 (2007), which prohibits anti-competitive collusion.

The 2018 crackdown itself was then challenged in court by the affected federations. On 12 September 2024 a Supreme Court bench of justices Sapana Pradhan Malla and Balkrishna Dhakal, ruling on a writ petition filed on 17 July 2018 by the Federation of Truck Transport Entrepreneurs Nepal (FTTEN) and involving the FNNTE, held that key parts of the government's action were unconstitutional. The court found that only the CDO may renew or revoke an association's registration under the Associations Registration Act, so the government's blanket refusal to renew, cancellation of registrations and confiscation of property had exceeded its authority and violated natural justice.

This ruling is central to understanding the story honestly. It did not restore the route-permit veto or bless the entry cartel; the anti-syndicate direction of the 2011 mandamus and competition law still stands. What it condemned was the manner of the 2018 crackdown, the procedure by which the government deregistered and seized, ordering confiscated property released and registrations handled through lawful process. The result is a reform that reshaped the sector but remains legally and practically contested, with syndicate-like conduct periodically resurfacing on new fronts such as ride-sharing disputes.

The durable legacy of 2018 is procedural: the committee's recommendation is no longer the gate to a route permit, company registration is the recognised path for new operators, and the state demonstrated, with arrests and account freezes, that it could confront the cartel directly. New companies did enter routes that had long been closed, and the principle that a public permit should not be privately vetoed was firmly asserted.

Yet many observers argue the syndicate mindset outlived the 2018 committees. Converting to companies did not automatically dissolve turn systems, fare-fixing or informal entry controls, and enforcement of the task-force recommendations was uneven. The 2024 Supreme Court decision, by faulting the crackdown's legality, gave the federations a partial vindication and left the boundary between legitimate operator associations and illegal cartels blurred.

For commuters, journalists and prospective operators, the accurate takeaway is nuanced. The 2018 drive was a landmark attempt to end route-permit gatekeeping, backed by cabinet decisions, a Companies Act mandate and a five-point deal; it changed the law and opened some routes, but it neither fully dismantled the cartel in practice nor survived judicial review intact. It is best read as a defining, still-unfinished chapter in Nepal's transport governance rather than a clean, closed victory.