KATHMANDU, NOV 30 - Nepal Electricity Authority (NEA) is reeling under serious financial crisis due to increasing electricity loss, irregularities in construction of hydropower pro-jects and frequent political interference, experts said on Sunday.

Government share investment has declined from Rs. 32.28 bi-llion to Rs. 20 billion.

“If the present annual loss of around Rs. 4 billion continues, NEA is likely to go bankrupt in the next four to five years,” said an official at the Finance Department of NEA on condition of anonymity.

NEA’s accumulated loss stands at around Rs. 12 billion. Due to loss incurred in recent years, NEA has failed to invest in any new hydro project in the country.

 Meanwhile, NEA has already stated that power cuts will be severe in the next two years with daily outage going up to 18 hours. Worse, power outage will go up to 20 hours a day if the 456-MW Upper Tamakoshi hydropower project fails to be commissioned by 2013.

Finance Secretary Rameshwor Khanal said projects that received grants from donors turned costly as the authority didn’t keep the project cost low. “NEA had to incur loss due to such costly pro-jects,” he added.

Projects like Khimti and Bhotekoshi, commissioned with donor help have proved most expensive for NEA till date.

He said that half of NEA’s loss is mainly due to lower electricity tariff. “Electricity is the cheapest source of energy in the country, cheaper even than firewood,” Khanal said.

NEA has to increase tariff while ensuring dedicated

power supply to industry,

trade and travel sectors, he added. 

Kishor Babu Aryal, former secretary at the then Ministry of Water Resources says, there is need to restructure NEA and increase tariff, which has remained unchanged for years. 

Delayed project construction like Middle-Marshyangdi and Kali-Gandaki has also affected NEA.

Besides, around 41 percent of the total energy distributed by NEA is purchased from other developers.

Due to political transition and instability, the government has failed to increase the tariff, which has discouraged investment from private hydro promo-ters.  NEA incurs loss of Rs. 1.99 on each unit bought from other developers. The average purchase rate per unit is around Rs. 6.71. 

“There is thus an urgent need to revise electricity tariff to save NEA from bankruptcy in the next couple of years,” said an NEA official.

Posted on: 2009-11-30 10:03

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