The government had written off its accumulated loss of Rs 27.32 billion just two years ago. There should be a rise in the income after rise in the cost of product when accumulated loss has been reduced to zero according to basic principle of the market and NEA’s data also shows a rise in the income. But the operating cost of NEA is also rising at a very high rate. The proposal by NEA to again raise tariff citing the rise in loss, and support from the Electricity Tariff Fixation Commission (ETFC) for the proposal have given room to doubt their intention. The private sector, that also has a representative in ETFC, has already stated clearly that it will not support the hike. The private power producers have raised questions even about the relevance of ETFC. They argue that electricity tariff should be determined according to the state of demand and supply in the market and the price of petroleum products in the international market as per the principle of free market economy. But there is a risk that leaving the market free to determine the price may also prove to be counter-productive as the government still controls transaction of electricity. The demand of NEA that the government should provide grant for the street lights and the loss suffered due to the difference between the cost and selling prices of electricity can also not be called wrong. The demand for grant for an essential commodity like electricity when the government is already providing a grant of around Rs 2 billion a month for petroleum products is also a matter to ponder about.
The proposal to raise electricity tariff even without fulfilling the prior committed reform programs should be immediately withdrawn at a time when the Nepal Water Supply Corporation (NWSC) has already issued public notice informing about a huge rise in price of drinking water across the country. Such proposal should only be moved forward after NEA succeeds in reducing leakage, reduces the free electricity provided to its staffers and initiates other reform programs as per its five-year plan.
Source : Karobar