Jul 31, 2017-
The Nepal Electricity Authority (NEA) has been able to reduce its losses radically by controlling power leakage and hiking the tariff.
The state-owned power utility posted a net loss of Rs970 million in the last fiscal year, a whopping 88 percent drop from the previous fiscal year’s Rs8 billion.
The NEA had projected a net loss of Rs7.6 billion at the beginning of the last fiscal year, but its performance surpassed expectations.
Meanwhile, revenues increased significantly to Rs40 billion in the last fiscal year, up Rs8 billion from the previous year’s Rs34 billion. The major reason behind the surge in income is the hike in the tariff.
“The weighted average tariff rate increased by 9 percent contributing an additional Rs5 billion to our cash flow,” said Kulman Ghising, managing director of the NEA.
Apart from the increased charges for electricity, another reason behind the NEA’s improved financial statement is its relentless drive to control electricity leakage under the leadership of Ghising.
The NEA slashed electricity leakage by around 3 percentage points in the last fiscal year, resulting in savings of at least Rs2 billion.
According to the annual report for the fiscal year 2015-16, leakage had reached as high as 25.78 percent of the total supply at the end of the last fiscal year.
The NEA was able to cut leakage following a nationwide campaign to prevent power theft and the arrest of some its errant employees.
The NEA’s new Managing Director Kulman Ghising moved to control energy theft and leakage after taking office in mid-September 2016.
The Ministry of Energy had told Ghising to cut electricity leakage by 1 percentage point when he was given the job. Ghising in turn delegated responsibility to the regional chiefs to cut losses by the same proportion.
The NEA’s Janakpur distribution centre was able to cut leakage to 32.61 percent in mid-January 2017 from 52.33 percent during the same month a year ago, according to the authority.
Likewise, the Biratnagar distribution centre’s losses came down to 16.7 percent from 19.78 in the same period.
The authority’s distribution centres in Hetauda, Butwal, Nepalgunj and Pokhara have also been able to cut electricity leakage.
Similarly, a reduction in the NEA’s administrative expenses has been another reason behind the fall in losses. Although administrative costs were expected to total Rs7 billion, they stood at Rs6 billion.
Also, the NEA was able achieve some savings by cutting down on imports of high-priced energy and buying a greater quantity of cheaper power.
Cheaper imports through the Dhalkebar-Muzaffarpur cross-border transmission line were increased and imports from Bihar state-controlled entities were decreased.
The cost of the electricity imported over the Dhalkebar-Muzaffarpur line stands at IRs3.60 per unit. However, the electricity imported through other cross-border transmission lines is purchased from entities controlled by state governments and costs much more, or well above IRs5.50 per unit.
NEA proposes power tariff hike
Nepal Electricity Authority (NEA) has proposed to raise electricity tariff by an average of 16 percent. An NEA board meeting held two weeks ago had forwarded the new tariff structure to the Electricity Tariff Fixation Commission (ETFC), the entity which is authorised to raise electricity price.
If the commission approves NEA’s proposal, customers consuming less electricity might have to pay less than what they are now paying, while industrial customers may see tariff hike of around 20 percent.
NEA has proposed to reduce minimum charge for electricity consumption to Rs60 per month from existing Rs80.
The minimum charge covers electricity consumption of up to 10 units per month. Currently, the threshold for minimum electricity consumption has been fixed at 20 units.
If NEA’s proposal is endorsed, tariff for consumption of 10 to 40 units of electricity will also be revised to Rs7 per unit.
NEA has also proposed to impose a tariff of Rs12 per unit for electricity consumption that exceeds 400 units a month.
Source: The Kathmandu Post