SC clears way for hike of electricity tariff


    supreme_court_buildingThe Supreme Court (SC) has cancelled the writ petition filed demanding that electricity tariff be hiked by just five percent and the raised tariff not be implemented.

    The SC, conducting the final hearing on the petition filed by the Consumers Rights Protection Forum in the second week of September, has cancelled it deeming it to be not in accordance to the laws. This has now paved the way for the Electricity Tariff Fixation Committee (ETFC) that had raised tariff by 13.7 percent on an average in the second week of September. The forum had filed an anticipatory writ even before the ETFC had formally announced its decision. The single bench of Justice Cholendra Shumsher Rana had then issued an interim order to not raise tariff immediately obstructing implementation of the ETFC’s decision to hike tariff.

    Managing Director (MD) of the Nepal Electricity Authority (NEA) Mukesh Raj Kafle says the ETFC should now implement the decision of raising tariff after the SC paved the way. “The SC had stopped hike of tariff even when it was last increased two years ago and had later allowed it. The SC has again delivered a verdict of similar nature now and there is no alternative to raising tariff,” he adds. He argues that tariff should be hiked as the NEA suffers annual loss of Rs 6 billion, and has already lost Rs 1.25 billion in six months this year by selling electricity imported from India at a cheaper rate to consumers. Accumulated loss of the NEA, according to him, will rise to Rs 25 billion in the current fiscal year. The government had written off accumulated loss of Rs 27.50 billion of the NEA a few years ago.

    Deputy Director at the NEA Jayaraj Bhandari says that the Electricity Regulation has a provision of annually raising tariff by up to five percent but it has not been implemented in lack of a formula. “We would have been forced to hike tariff even by five percent a year if there were formula,” he reasons. ETFC Chairman Jagat Kumar Bhusal says the decision taken earlier will not be implemented despite cancellation of the writ petition. “We will hike tariff by just five percent as per the Electricity Regulation if it has to be hiked. We will only decide after seeing if the NEA has fulfilled the commitments it had made before tariff was last hiked,” he states.

    He reveals the ETFC has written to the NEA to provide details about 10 issues including cost, income, free electricity, rate of power purchase agreement (PPA), formula adopted while signing PPA, control of leakage, and technical and policy targets. “We are waiting for NEA’s response. We will only take decision depending on the kind of response we get,” he adds. He claims that income of the NEA will rise by Rs 1.50 billion a year if it managed to reduce leakage by five percentage points. “The NEA can increase its annual revenue by billions if it were to control leakage. It should not just put pressure to hike tariff and also pay attention toward control of leakage,” he argues. The NEA says it loses over Rs 5 billion a year due to leakage. The current leakage of NEA is around 24 percent.

    The ETFC had decided to raise tariff of those using up to 20 units a month by Rs 20 to Rs 100 in September. The ETFC had initiated process to hike tariff after the NEA last May proposed to raise tariff by 20 percent to maintain financial balance affected by the rising cost of electricity. The ETFC had raised tariff by 20 percent on an average a couple of years before that. It had last raised tariff by 30 percent in September, 1991before that.

    The NEA has been saying that it has been suffering huge loss due to PPA done with Khimti and Bhotekoshi in US dollar, and import of electricity from India.

    Source : Karobar Daily