NEA faces mounting losses due to increased electricity import

NEA_BuldingKATHMANDU, Aug 16: The Nepal Electricity Authority has suffered huge losses even as electricity tariff was reviewed in the fiscal year 2011/12. Increasing import of electricity has been blamed as a major reason driving annual losses to Rs 5.70 billion in the fiscal year 2013/14 up from Rs 4.56 billion the previous fiscal year. 

NEA imported Rs 1.07 billion units of electricity worth around Rs 8.25 billion from India in the last fiscal year, it had imported only Rs 790 million units worth around Rs 6 billion in the fiscal year 2012/13. “Increasing electricity import is the major reason for mounting annual losses,” Lekhanath Koirala, NEA´s acting deputy managing director, told Republica. 

“We are selling electricity at lower rates and the only way to improve the situation is to adjust electricity tariffs with the cost NEA pays to India and other independent power producers for electricity,” added Koirala. Nepal imports electricity at an average rate of IRs 5.25 (NRs 8.4) per unit. The per unit retail rate of the electricity of NEA is Rs 8.04 per unit. Nepal imports up to 200 megawatts of electricity from India during the dry season. 

Though rich in water resources, the country is becoming more dependent on India for electricity, which has widened the country´s trade deficit, experts say. “Had there been cross-border transmission lines, we would have been importing up to 400 megawatts of electricity during the dry months widening the trade deficit with India,” said Sher Singh Bhat, spokesperson of NEA. The cost of fossil fuel import has already surpassed the country´s total commodity export. 

Net loss of NEA stood at Rs 8.55 billion in 2011/2012 and Rs 6.51 billion in 2010/11. It may be noted that NEA´s accumulated losses amounting to Rs 27 billion was written off by the government a year ago. NEA´s losses in the fiscal year 2012/13 had been halved after 20 percent hike in electricity tariffs.

“However, half of NEA´s losses results from provisioning for pension and gratuity of the employees,” claimed Koirala. He also complained that the government had promised to compensate for losses incurred while importing electricity from India but the finance ministry only disbursed around Rs 1 billion in this fiscal year as government´s equity in the NEA. 

Other measures had also been planned to bring down NEA´s losses. But it also failed to reduce electricity leakage. Of the total loss, 25.11 percent of NEA´s losses resulted due to technical reasons in the fiscal of 2012/13. A total of 23.50 megawatts of electricity was connected to the national grid in the fiscal year 2013/14. NEA is marking its 29th anniversary on Sunday.

Source : Republica