Passport procurement deadlock ends as German firms to print Nepal’s e-passports; MoFA clears way despite ongoing corruption case

KATHMANDU: The uncertainty surrounding Nepal’s electronic passport (e-passport) procurement has come to an end, with the Ministry of Foreign Affairs deciding that the two German companies awarded the international contract—Veridos GmbH and Muhlbauer Group—will proceed with printing and delivering Nepal’s passports despite an ongoing corruption case before the Special Court.

The decision comes after nearly two weeks of uncertainty triggered by the Commission for the Investigation of Abuse of Abuse of Authority (CIAA)’s corruption case over the passport procurement process, which had raised questions over whether the contract would be suspended.

According to a senior Ministry of Foreign Affairs official, the government has reached an understanding that allows the passport procurement project to continue independently of the judicial proceedings.

“Once the existing stock of around 50,000 passport booklets is exhausted, the newly contracted companies will begin printing passports. Until then, work will continue in a way that the ongoing case at the Special Court does not affect implementation of the contract,” the official said.

The decision is expected to prevent disruption in passport issuance and avoid shortages for Nepali citizens seeking travel documents.

Existing stock sufficient for only a short period

Officials at the Department of Passports said the remaining inventory of approximately 50,000 passport booklets is expected to last only for a limited period based on current demand.

Preparations for the new production system have already been completed.

According to the department, Veridos has already printed around 500,000 passport booklets, making it eligible to receive payment of approximately Rs 420 million under the procurement contract.

Meanwhile, Muhlbauer has completed installation, integration and management of the passport personalization equipment. The company is responsible for installing, maintaining and operating the passport personalization infrastructure and will receive payment after the production process officially begins.

Corruption case had stalled implementation

The procurement process entered uncertainty after the CIAA filed a corruption case at the Special Court alleging irregularities in the international tender process for Nepal’s biometric passport system.

The anti-graft body has named Department of Passports Director General Tirtha Raj Aryal, other officials, representatives of the German companies and the companies themselves as defendants, seeking recovery of more than Rs 10.13 billion.

The Special Court later released seven defendants, including Aryal, on bail or ordinary court attendance pending trial.

The legal proceedings had created uncertainty over whether implementation of the procurement contract would continue, raising concerns about a possible shortage of passports.

German Embassy rejects reports of diplomatic pressure

The government’s decision also follows an official clarification issued by the German Embassy in Kathmandu, which rejected reports suggesting Germany had warned Nepal over the corruption case.

In a public statement, the embassy said reports regarding diplomatic engagement over the passport procurement issue were “false or misleading.”

The embassy clarified that Nepal’s Chargé d’Affaires in Berlin had merely been invited to a meeting at the German Federal Foreign Office and had not been summoned.

It further stated that:

• No diplomatic protest note or official document was handed over to Nepal.
• No warning was issued regarding possible consequences of the ongoing court proceedings.
• Germany fully respects the independence of Nepal’s judiciary and does not comment on ongoing legal cases.

The clarification sought to dispel speculation that Germany had exerted diplomatic pressure over the prosecution of the companies involved in the passport contract.

Political controversy preceded CIAA action

The controversy intensified after officials from the Department of Passports were called to the Office of the Prime Minister and Council of Ministers over delays in passport printing.

Officials from the CIAA were also invited to discussions at the Prime Minister’s Office, where they were reportedly questioned about why corruption charges had not yet been filed despite alleged irregularities in the procurement process.

The meetings drew criticism from constitutional and governance experts, who argued that summoning officials from an independent constitutional body and involving diplomatic representatives in discussions related to an ongoing investigation raised concerns about institutional independence and diplomatic protocol.

Later that same day, the CIAA arrested Department of Passports Director General Tirtha Raj Aryal, Director Sunil Kumar KC, and Manindra Raj Malla, a facilitator associated with Muhlbauer. Another representative linked to Veridos, Siddhartha Thapa, later became unreachable during the investigation.

Within a week, the CIAA formally filed its corruption case before the Special Court.

Long-running competition over passport contract

The latest procurement has also been marked by prolonged legal disputes involving French identity solutions company IDEMIA, which had supplied Nepal’s machine-readable passports and later its electronic passports for nearly 15 years.

IDEMIA, which succeeded French company Oberthur following a corporate merger, had continued supplying passport booklets under variation orders after the government’s previous procurement process was delayed.

The company participated in the latest international tender but lost to the German consortium.

After failing to secure the contract, IDEMIA sought administrative review from the Department of Passports, later filed complaints before the Public Procurement Review Committee, and subsequently challenged the procurement process before the Supreme Court, where litigation remains pending.

German bid significantly cheaper

The German consortium secured the passport contract at US$8.61 per passport booklet, substantially below IDEMIA’s latest bid of US$9.93 per booklet.

Previously, IDEMIA had supplied passports to Nepal at around US$10.13 per booklet, having originally signed its earlier contract at US$10.45 per passport.

The price difference was one of the key factors in the government’s procurement decision.

However, the CIAA alleges that changes made to the tender specifications resulted in a reduction in passport quality—an allegation disputed by former officials of the Department of Passports.

Department officials maintain that the technical specifications met international standards and note that payments to suppliers are linked to verification of the passport booklets and related services under the contract.

Passport issuance to continue

With the Ministry of Foreign Affairs deciding to proceed with implementation of the contract, Nepal is expected to avoid an interruption in passport issuance despite the ongoing judicial proceedings.

Government officials say the remaining stock of passport booklets will bridge the gap until the German suppliers formally begin production under the new contract, ensuring continuity of one of the country’s most critical public services while the corruption case proceeds independently before the Special Court.