Germany takes over Nepal Passport printing as 15-year French monopoly ends

KATHMANDU: Nepal has officially ended the 15-year dominance of French passport technology provider IDEMIA (formerly Oberthur Technologies) in printing its passports, with two German companies taking over the production of electronic passports under a newly implemented system.

The Department of Passports (DoP) began operating the new e-passport printing system on Thursday under a contract awarded to German firms Mühlbauer and Veridos, marking one of the biggest changes in Nepal’s passport management since the introduction of machine-readable passports in 2010.

The transition follows an international competitive bidding process in which IDEMIA lost the contract for printing 6.4 million passports, bringing to an end a business relationship that lasted more than a decade and involved the production of approximately 13 million machine-readable and electronic passports for Nepal.

According to a notice issued by the Department of Passports, preparations for the migration to the new passport issuance platform have been completed. However, passport services will remain temporarily suspended while data and operations are transferred to the new system.

Passport services at District Administration Offices, Area Administration Offices and Nepali diplomatic missions abroad will remain closed for three days from July 8 to July 10 (Asar 24–26). Services provided directly by the Department of Passports will remain suspended for July 9 and 10 (Asar 25–26) and will resume through the new system from July 13 (Asar 29).

German Firms Split Responsibilities

Under the new procurement arrangement, the contract has been divided between two German companies.

Mühlbauer will be responsible for the technological infrastructure, including pre-enrolment, enrolment, data management and passport delivery systems under Package I.

Meanwhile, Veridos will handle passport booklet production, personalization, quality control and packaging.

The Department expects the new system to improve both the security and physical quality of Nepali passports.

Officials say the long-standing issue of passport covers fading over time has been addressed under the new specifications. The new passport booklets will also contain 50 percent cotton paper, replacing the previous paper that contained only 20 percent cotton, bringing Nepal’s passport closer to international standards used by many countries.

The switch is also expected to reduce production costs. While a 34-page passport booklet previously cost US$10.14 to print, the new contract reduces the cost to US$8.62 per passport, generating substantial savings over the life of the contract.

End of a Long Partnership

Nepal first signed a contract with French company Oberthur Technologies on December 21, 2010, for the printing of 4.5 million machine-readable passports (MRPs).

The government subsequently procured an additional 2.7 million passports through contract variations. In November 2020, the company—by then operating as IDEMIA following mergers and acquisitions—secured another contract to print 2 million electronic passports, which was later expanded through multiple variations totaling an additional 3.8 million passports.

In total, IDEMIA printed approximately 13 million Nepali passports during its 15-year tenure.

However, the company failed to retain the contract after losing the latest international tender for 6.4 million passports.

Audit Questions Remain Unresolved

The end of IDEMIA’s contract also revives longstanding concerns raised by Nepal’s Office of the Auditor General regarding the company’s tax compliance and procurement practices.

Successive audit reports have questioned whether the government properly withheld taxes on payments made to the foreign contractor.

According to the 63rd Annual Report of the Auditor General, Nepal paid approximately Rs 5.92 billion to the foreign company through letters of credit but did not appear to deduct the 5 percent tax required under Nepal’s Income Tax Act on income remitted abroad by foreign permanent establishments.

The Auditor General estimated that around Rs 295.8 million in applicable taxes should have been assessed, recommending that the government determine the tax liability. Despite repeated observations in annual audit reports, no public action has been taken.

Questions Over Commission Payments

The passport procurement process has also faced allegations regarding commission payments made outside Nepal.

According to financial records previously reported by Business News, the French contractor allegedly transferred commission payments related to passport printing, supply and personalization to offshore companies registered in Hong Kong and later Singapore.

The records indicate that payments were made first to Regent City Far East Limited in Hong Kong in 2011 and 2012 before shifting to Capital Biz Solution Pte Ltd, a Singapore-registered company established in 2012 and reportedly linked to five Nepali nationals.

Documents reviewed by the publication show payments totaling at least US$969,781 to the offshore companies under descriptions such as passport printing, supply and personalization commissions. The report further alleged that total commission payments may have exceeded US$10 million, although government authorities have not publicly confirmed those figures or launched a formal investigation.

Procurement Variations Also Under Scrutiny

The Auditor General has also repeatedly questioned repeated contract variations used during passport procurement.

Audit reports noted that although infrastructure costs had already been recovered, passport booklets continued to be procured at US$10.13 per unit without corresponding price reductions.

Another audit observation pointed out that although the original contract price for passport printing was US$3.59 per booklet, a subsequent variation for printing 2.5 million passports in 2015 increased the unit cost to US$5.14, raising concerns over procurement efficiency and value for money.

Despite repeated audit observations over several years, no government agency has publicly announced investigations or legal action related to the procurement process.

With the transition to the German-led passport production system now underway, the government expects improved passport quality, lower production costs and greater technological reliability. However, unresolved audit findings surrounding the previous contracts continue to cast a shadow over one of Nepal’s largest long-term government procurement projects.