Kathmandu, August 17:

Nepal Electricity Authority (NEA) has suffered a loss of Rs 1.91 billion in the fiscal year 2004-05, due to increased conflict, low consumption of electricity in industrial areas and weak performance of by tourism sector.

Dr Tulsi Giri, vice-chairman of council of ministers speaking at the 20th anniversary of NEA, informed that the government is all set to bring out a new hydropower policy and regulation to boost hydropower development. He stressed on the need to focus on small and medium-sized hydropower projects for the overall economic development of the country.

Dr Janak Lal Karmacharya, managing director of NEA, speaking at the function disclosed the extent of losses. Talking about the progress report of NEA, Karmacharya said, “Electricity sales in fiscal year 2004-05 totalled to 1964.39 GWh, which is an increase of about nine per cent compared to the previous fiscal year’s sales. Total electricity sales comprised of 1853.69 GWH as internal sales and 110.70 GWh as energy exports to India.

However, the performance report of NEA has shown that export of electricity to India in this fiscal has gone down by 21.62 per cent. But internal consumption of electricity has registered an increment by 11.70 per cent compared to the last fiscal year 2003-04, says a NEA report.

Karmacharya commented that the quality of sales did not turn out to be adequate, as the proportional revenue increase is not satisfactory and export has also not been upto the expectation. The total number of consumers by the end of fiscal year 2004-05 stood at 11,59,855 registering an annual growth of 10.05 per cent. This comprised of 11,13,740 consumers in the domestic sector, 22,500 in industrial sector, 6,000 in commercial sector, 9,950 in non-commercial sectors and the rest by other categories of consumers.

He said that security situation in rural areas has made revenue collection extremely difficult and the impact of this adverse security situation was such that even metre reading in some 100,000 households could not be done. NEA’s net fixed assets decreased marginally by 0.37 per cent to an estimated Rs 58,747.48 million. Expenditure in generation, including cost of power purchases, increased to Rs 7.36 billion. Administrative expenses increased by Rs 22.54 million to Rs 511.64 million and one of the reasons for the increased administrative expenses was the allowance of extra 20 per cent of salaries to employees, said the progress report.

Hari Krishna Shaha, employees’ union leader of NEA, expressed serious concerns that due to fragile management, NEA has been incurring heavy losses. NEA has faced serious problems in revenue generation, as it has not found feasible investment areas for its sustenance. Criticising privatisation of NEA, Shaha commented that it is not a ‘panacea’ for correcting existing anomalies or to fuel revenue collection.

There should be fair and transparent mechanism for appointing board of directors of NEA as the management needs to be ‘effective and vibrant’, Shaha demanded. The NEA management expressed its commitment it would continue to make efforts to comply with International Accounting Standards (IAS) recommendations to bring NEA’s accounts in line with internationally accepted practices for which a recognised international consulting firm is going to be employed to carry out the task of improving financial management.