Electricity tariff to rise by up to 17 percent

Electricity BillThe Electricity Tariff Fixation Commission (ETFC) has prepared to raise tariff by up to 17 percent on an average on the basis of consumption.

It is currently doing financial analysis to raise tariff effective from mid-September to help the Nepal Electricity Authority (NEA) offset its losses. Chairman of the ETFC Ganesh Prasad Subba states that raising tariff by 17 percent will increase the income of NEA by a minimum of Rs 3 billion a year. “It will have to offset the remaining loss by cutting expenses and reducing leakages,” he adds. The NEA suffered a loss of Rs 5.75 billion in the last fiscal year and its accumulated loss has already reached Rs 18 billion.

Subba reveals the ETFC is preparing to raise the minimum tariff for those using only 20 units a month by Rs 20 to Rs 100. The demand charge levied on industries will also rise. “Tariff will rise soon as we don’t have much work remaining,” he says. The ETFC has already received opinion from the stakeholders concerned about tariff hike organizing a public hearing in Kathmandu recently. Subba, whose term expires at mid-September, plans to leave the post after raising tariff.

The ETFC had initiated the process of tariff hike after the NEA proposed a 20 percent hike in May, 2013 to balance the rising financial loss owing to increasing cost of electricity. The ETFC had raised tariff by 20 percent on an average before that. The NEA has been stating that it suffers huge loss on procurement of electricity from Khimti and Bhotekoshi projects, and India.

The NEA has proposed to raise tariff on single-phase electricity to Rs 5 per unit to Rs 13 on the basis of consumption. It has proposed to raise tariff for those using up to 20 units a month to Rs 5 per unit, 21-50 to Rs 8.80, 51-150 Rs 10.30, 151-250 Rs 11.40, and above 250 Rs 13.20. It has also proposed to raise tariff to Rs 15 per unit from Rs 12.50 for three-phase connections. The NEA, likewise, has proposed to the ETFC to raise demand charge to Rs 265 per KVA from Rs 220.

The ETFC had raised tariff by 20 percent two years ago without changing the rate of Rs 4 per unit for those using up to 20 units a month. It was raised to Rs 7.30 for those using 21-50, Rs 8.60 for 51-150, Rs 9.50 for 151-250, and Rs 11 for above 250.

The ETFC earlier in January had also prepared to hike tariff but it was stopped after the then vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Pashupati Murarka, representing the private sector in the ETFC, took a stand that tariff should not be hiked until the commitments of reducing load-shedding and leakage, cutting administrative expenses, and not charging demand fees at the time of power cuts made by the NEA while raising tariff two years ago were implemented.

Load-shedding has now increased to up to 14 hours a day during the dry season while leakage is around 25 percent. The NEA had expressed commitment to reduce leakage to 23 percent and slash operating cost. The NEA has been losing over Rs 5.50 billion a year through leakage alone. The ETFC had last raised the tariff on September 17, 2001 by 30 percent before it was reviewed two years ago.

Source : Karobar Daily