Govt. Power Monopoly Reduced Losses

Govt. Power Monopoly Reduced Losses
New Business Age, September 2007

Nepal Electricity Authority (NEA) is planning to impose power cuts upto 11 hours a day in the coming dry season (November-April) when the peak time power deficit is forecast to be as much as 354 megawatts. The longest load shedding of 11 hours will happen in the month of February and March and Birgunj will be the worst hit city, according to the NEA source.

The country suffered load shedding also during the rainy season that is about to end now. According to Sher Singh Bhat, Acting Director, system operations of the NEA, since the national grid is still short of power by 110 MW, the NEA has no option but to impose power cuts throughout the year. The country needs 640 megawatts of electricity at present but only 540 MW is being generated. The authorities estimate that the demand is growing by 50 to 60 MW every year.

According to one employee leader of the NEA, the current load shedding is exacerbated due to closure of Kulekhani Second where the turbine is out of order. This has taken off 16 MW from the NEA grid. While addressing a program organized to mark the 22nd anniversary of the NEA, Dhruba Kumar Upreti, the president of NEA Employees’ Association also informed that both Modi and Gandak electricity projects (combined capacity 30 MW) are also closed at present.

On the other hand, the NEA has reported failure to achieve the stated goal of controlling the power leakage in the fiscal year of 2006/07 and it has blamed the political situation for the same. According to the NEA report, that year, the power leakage was at 24.94 percent while it was 25.12 percent in the year before that.

However, the total revenue of NEA increased in 2006-07 by 12.20 percent over the previous year to reach Rs. 15.67 billion. In the same period, NEA’s operating cost increased by 11.22 percent thus reducing the annual net loss to Rs. 329 million, a decrease of hefty 74 percent compared to the previous year when the net loss totaled Rs. 1.26 billion.

But the reduction in losses was not due to enhanced efficiency of the NEA. As the NEA has stated, the loss was reduced due to devaluation of the US dollar and decrease in the interest rate on the loan from the government to 8 percent from previous 10.25.