News Article

MoF reimburses Rs 3.96b to NEA

By Republica

Published: July 19, 2016 01:00 AM

KATHMANDU, July 19: Ministry of Finance (MoF) has reimbursed Rs 3.96 billion to Nepal Electricity Authority (NEA) to compensate for the loss that the latter incurred while distributing energy imported from India.

Nepal is importing around 7.7 million units of electricity from India on a daily basis. Per unit import cost is around Rs 3 per unit higher, including technical loss, than what NEA collects from consumers. The government had pledged to compensate NEA for the loss when it decided to import electricity from India to minimize chronic power shortage.

The ministry released the reimbursements of two fiscal years - 2014/15 and 2015/16 - to NEA on Friday - the last day of 2015/16.

NEA has been making payment to India every month by diverting funds from its other projects. Because of the delay in getting reimbursements from the government, many of its projects are facing fund crunch. It is one of the reasons why power utility reports loss in every fiscal year.

Officials of NEA said the reimbursements received on Friday will increase cash availability and enable the power utility to foot import bill of next few months. They, however, said NEA will face similar problem after few months.

NEA officials say that the finance ministry should reimburse an additional Rs 1.03 billion as of May.

However, an NEA official told Republica that the finance ministry has informed them that NEA will no longer be getting reimbursements.

On May 30, NEA's Managing Director Mukesh Raj Kafle had requested the parliamentary Agriculture and Water Resources Committee for addressing its cash flow problem. Kafle had told the committee that the failure to make payment to India in time might lead to increment in load-shedding hours.

NEA increased energy imports from India, even though the price is higher than what it offers to domestic hydropower developers, after Ministry of Finance agreed to compensate for the loss as per the load-shedding minimization plans announced some four years ago. But NEA had not received even a penny from the finance ministry for the past two years.

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