NEA’s financial wœs not over yet

TWO years after the government wrote off its accumulated loss, the Nepal Electricity Authority’s (NEA) financial position is still shaky. Its accumulated loss has again ballooned to Rs 14.31 billion. Writing off its accumulated loss of Rs 27 billion, the government had endorsed the NEA Financial Restructuring Plan. But financial wœs continued to plague the stateowned power utility as it recorded a loss of Rs 9.86 billion in 2011-12. In last fiscal year, NEA was supposed to have better financial results after the electricity tariff hike. But despite a 20 percent hike in power tariff, NEA posted a loss of Rs 4.56 billion in 2012-13. The NEA top brass, however, say the reduction in the loss is itself an achievement. NEA Executive Director Rameshwor Yadav said they succeeded in reducing the annual loss by around 50 percent in 2012-13 compared to the previous year. He termed it “great achievement”. “The main reason behind the loss is the low tariff rate compared to the production cost of electricity,” said Yadav addressing NEA’s 28th anniversary function here on Saturday. “NEA has become successful in collecting outstanding dues. However, dues amounting to Rs 7.98 billion are yet to be collected as of the end of the last fiscal year.” NEA increased the power tariff by Rs 1.21 per unit in the last fiscal year. However, it failed to offset the losses. With the increment in the tariff, NEA’s electricity sales increased by 22.45 percent to Rs 24.599 billion in last fiscal year. But operating expenses also increased by 2.46 percent to Rs 25.071 billion. The power purchase expense is the largest component of NEA’s operating expenses. The state-owned

power utility spent Rs 13.49 billion for power purchase — 53.82 percent of the total operating expenses and 51.49 percent of its total income. According to NEA, its loss continued to grow as it had to import more electricity from India last fiscal year compared to the previous year. “The cost of production of electricity in Nepal is high and so is the situation of leakage,” said Energy Secretary Bishwo Prakash Pandit. “There is also the issue related to financial transparency. We need to resolve these issues.” Electricity leakage stood at 25.03 percent in the last fiscal year. “We have taken leakage control to some extent as an encouraging achievement,” said Yadav. “This has become possible due to result-oriented solution process and continuous efforts.” NEA has sought help from the political parties and civil society for further reducing the leakage. Of the 37 public enterprises, the NEA is one of the largest loss-making entities. Lack of financial transparency, political intervention and adhoc decisions are some of the factors for NEA’s poor financial status. NEA officials say the main reason behind rising loss is the lack of proper management and indifference of authorities concerned. According to the NEA annual report, its consumer base increased to 2.59 million at the end of the last fiscal year. Of the total costumers, household customers continued to be the largest consumers with a share of 95.12 percent, followed by industrial and others.