KATHMANDU: Shekhar Golchha, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and other FNCCI officials and entrepreneurs met Minister for Energy, Water Resources and Irrigation Pampha Bhusal on July 20, 2021.
They demanded that either the Nepal Electricity Authority (NEA) should offer the loan waiver on Rs 20 billion due in the name of the industrialists and entrepreneurs or to make the data of the Depth of Discharge (DOD) meter public.
It was a dispute over the payment of electricity tariffs for consuming trunks and dedicated lines during the extreme energy crisis.
Entrepreneurs had gone to the ministry and complained that they were paying the tariff as per the prevailing law for consuming electricity from NEA.
They warned NEA not to further discourage the industry. However, the NEA leadership is still not ready to resolve the electricity tariff dispute.
Because, NEA does not have the data of DOD meter of the trunk and dedicated line: the main basis for implementing the decision regarding the existing tariff rate from the 103rd meeting of the Electricity Tariff Assessment Commission held on January 13, 2016.
The meeting of the NEA seems to have decided that the tariff rate will be applicable only to the customers of the dedicated line who consume electricity continuously for 24 hours daily after January 13, 2016.
The financial statements of those who showed a profit on paper but had to be recovered are still the same. If the Auditor-General rejects the financial statement and puts it in the statement as bad debt, NEA will automatically be seen as a loss.
Earlier on July 1, 2015, the Authority had decided to provide the facility at the dedicated rate even in the case of consumers of trunk line group who use electricity for 20 hours or more while load shedding was maintained for a minimum of 6 hours.
Once the case reached the Commission for Investigation of Abuse of Authority (CIAA), it directed NEA on July 14, 2020, to ensure the amount of dedicated and trunk line consumption only before the end of load shedding from January 13, 2016.
The industrialists are demanding to disclose the details of the tariff set on the same basis. However, the Electricity Authority has not kept the TOD meter data of any dedicated feeder line and trunk line group of industrial customers during this period.
Since the data will only be safe for one year at most, the cunning entrepreneurs are demanding the TOD data. The Electricity Authority does not have the exact details of the actual use of electricity through dedicated and trunk lines.
NEA has repeatedly sent exemption bills to the industrialists saying that they are exempted from paying the premium tariff of the trunk line after the record of the TOD meter was deleted. But, the industrialists are not ready to pay.
The event took this course because none of the distribution centers, which should have downloaded such records and kept them safe, have not done so. NEA itself is in a moral crisis.
The NEA is working on a policy decision with the option of waiving the tariff as the directives given by the court, parliamentary committee, authority and the council of ministers for the recovery of arrears are not being implemented.
Where is the profit Kulman Ghising showed?
Kulman Ghising, who completed his first term as the Executive Director of the Nepal Electricity Authority (NEA) on September 13, 2020, was highly acclaimed for two achievements of his tenure as the Managing Director of NEA: end of load-shedding and leading the Authority which had been facing loss regularly to remarkable profit.
It has been a year since the current coalition government handed over the leadership of NEA to Ghising again, who has been weighed on the scales of these two important successes. The current government re-appointed Ghising as the executive director of NEA on July 10.
Ghising who had managed to show NEA in profit including Rs 16 billion lying as arrears during his first tenure, has not been able to raise it in the first year of the second tenure.
However, although the arrears of dedicated and trunk lines are not paid, the Authority has been providing additional load to the industries.
A meeting of the Board of Directors held in the third week of September 2021 has decided to amend the Electricity Distribution Regulations 2012 and give additional load to the remaining industrial customers to pay billions of rupees.
Since then, the then dedicated and trunk line users have been paying regular fees. The tariffs paid by these customers are now deducted from the old arrears and interest and penalties are being added to the remaining charges.
NEA spokesperson Suresh Bahadur Bhattarai says that the Authority has adopted the policy of adding the arrears and ensuring the regular payments so as not to let the extra electricity get wasted and not getting the market.
According to him, the decision was taken by the board of directors as per the proposal of NEA’s DCS (Directorate of Consumer Production and Distribution).
“NEA is wasting hundreds of megawatts of electricity and is losing millions of rupees. The industry has made good use of the wasted electricity. We are taking initiative to collect the arrears,” spokesperson Bhattarai said.
The industrialists who are reluctant to pay the premium price for using electricity through dedicated and trunk lines during load shedding are not only taking additional load without paying the arrears but are now in the game of making a policy decision to waive the arrears. If this happens, the NEA’s paper profit of about Rs 38 billion will automatically decrease.
NEA had shown the arrears of premium tariff on dedicated and trunk lines as Rs 16 billion which has now gone above Rs 20 billion.
Provided the arrears of ordinary consumers, government office, streets and public places, the arrears in the name of NEA has become more than Rs 38 billion.
According to NEA’s arrears, a total of 298 industries and corporations have availed of this facility out of 231 dedicated feeders and 76 trunk lines.
Out of them, 184 industries and corporations are yet to pay the premium tariff. Customers of 50 government agencies, hospitals, community drinking water, and irrigation authority have not paid their dues. The same amount of interest and fines has also increased close to Rs 38 billion.
Auditor General’s Office refuses NEA proposal
The internal audit of NEA is underway these days. The Auditor-General has now raised the question saying that the NEA has repeatedly shown wrong details regarding financial reform, income, profit, and collection of electricity tariffs to show the corporation is in profit.
On the basis of that, NEA, which did not keep the DOD meter details, has not even issued a bill of Rs. 6.34 billion in the fiscal year 2018/19 under the heading of the trunk and dedicated line.
As the details prepared by NEA and the details of the Auditor General officials look different, the latter has put pressure on the Authority to keep the arrears that cannot be collected under the bad debt.
This is because the 58th Annual Report of the Accountant General, during the audit of the Fiscal Year (FY) 2076/77, had questioned the NEA’s internal claims regarding the highest electricity tariff arrears, leakage and profit indicators.
The financial statements of those who showed a profit on paper but had to be recovered are still the same. If the Auditor-General rejects the financial statement and puts it in the statement as bad debt, NEA will automatically be seen as a loss.
Looking at the latest report of the Auditor General, it is seen that NEA has earned a net income (profit) of Rs. 11.68 billion in the fiscal year 2019/20.
Similarly, NEA had a profit of Rs. 9.87 billion in FY 2018/19. According to NEA’s internal financial report, the profit was Rs. 13.27 billion in FY 2019/20 and Rs. 9.84 billion in FY 2018/19. As the details of the Accountant General and the financial statements of NEA are in conflict with each other, the Auditor General’s office has tightened the rules during the internal audit.
In the Fiscal Year 2018/19, the arrears of the Electricity Authority was Rs. 15.54 billion. However, Kulman Ghising brought out the details of significant improvement in arrears and leakages.
In the meantime, the Auditor General’s report showed that the electricity tariff arrears have increased by about 73 percent.
The arrear which was Rs. 15.54 billion in 2019 had increased to Rs 32.18 billion in 2020. In order to evade this financial statement, the NEA management had cut the bill for the recovery of arrears for 49 trunk lines.
NEA prepared an income statement based on the same. While in the Fiscal Year 2018/19, the tariff of the trunk and dedicated feeder had not risen to Rs. 6.34 billion, the amount increased to Rs. 15.53 billion in a year.
The team including NEA Managing Director Ghising seems to be in a hurry to hide the weaknesses pointed out by the Auditor General’s office as the latter is now trying to keep the trunk and dedicated feeder in bad income.
According to NEA sources, the country has been declared load shedding free after May 14, 2018. After this, in case of an energy crisis, the decision of different charges for trunk and dedicated line has been automatically deactivated.
A file was sent to the Ministry of Finance to provide reimbursement saying that the NEA has incurred an additional burden of around Rs 3 billion as the basis for collecting arrears and the record of the TOD meter has been destroyed. However, the lobbying was halted after Janardan Sharma stepped down as finance minister.
On the basis of that, NEA, which did not keep the DOD meter details, has not even issued a bill of Rs. 6.34 billion in the fiscal year 2018/19 under the heading of the trunk and dedicated line.
According to the Auditor General’s report, NEA has not issued any bill of Rs. 2.15 billion in the Fiscal Year 2019/20.
The burden of this misappropriation is being borne by the Authority. According to sources, the Auditor General officials have also raised questions about the leakage of electricity.
Where is the report?
After the entrepreneurs refused to pay the arrears the government formed a committee under the coordination of Energy Secretary Dinesh Kumar Ghimire.
The Ghimire committee had the then Finance Minister Yubaraj Khatiwada, Energy, Water Resources and Irrigation Minister Barshaman Pun and Industry and Commerce Supplies Minister Lekhraj Bhatta also in the team to coordinate in the report making.
One year has passed since the committee submitted its report to the government on August 3. However, the Ministry of Energy, which is responsible for implementing the report, has not yet decided whether the tariff will be raised or not.
The industrialists are lobbying the Ministry of Energy, which has been given the authority to implement the report, not to pay a single penny.
If the government makes a favorable policy decision for them, it will automatically remove Rs 20 billion from NEA’s financial records.
The additional tariff on the trunk and dedicated lines has reached around Rs 10 billion after the end of the load-shedding terror.
Provided the NEA, which has already tied all the amount in the accumulated income, decides to waive the arrears, the management has taken the option of depositing Rs. 20 billion from the accumulated fund.
With regard to dedicated and trunk lines, as per the decision of the Supreme Court on 6 November 2018 and the direction of the authority, the customers using electricity through dedicated and trunk lines will not be obliged to collect additional tariffs until they get the details of the TOD meter.
In this case, the Auditor General will keep the NEA’s income of more than Rs 38 billion, including the Rs 20 billion, in bad income.
NEA will be burdened with a debt of Rs 38 billion at a time. If the Rs. 20 billion already tied in the financial records is not raised, NEA has to deposit another Rs. 20 billion from the reserve fund or by earning to cover the loss.
This will add a lump sum of Rs 40 billion to the head of NEA. By adding the same outstanding bill, Ghising had made a profit of around Rs 25 billion during his four-year tenure.
In order to avoid this power loss, most of the transmission lines in the country including the 132 KV transmission line coming to Pokhara (Lekhnath) through Dana-Kusma and the 220 KV Kaligandaki corridor should be repaired.
At that time, Rs 16 billion was left to be added to the account. For Managing Director Ghishing, who is now in his second term, this paper profit has become a headache.
A file was sent to the Ministry of Finance to provide reimbursement saying that the NEA has incurred an additional burden of around Rs 3 billion as the basis for collecting arrears and the record of the TOD meter has been destroyed. However, the lobbying was halted after Janardan Sharma stepped down as finance minister.
The Nepal Electricity Authority (NEA), which is trying to make policy decisions from the Council of Ministers due to financial temptation without paying billions, is wasting electricity worth Rs 40 million.
At present, electricity worth Rs 50 million is exported to India daily. The installed capacity of the central transmission system has reached 2205 MW.
That is, about 52.9 million units are produced daily. It is seen that 7 million units of electricity are being wasted due to the capacity of the system by cutting the 10 percent spinning reserve (reserve), tripping, leakage, etc often calculated by NEA. The 7 million units of electricity (Rs. 6.06 per unit) earns Rs. 42.4 million in India and Rs. 74.40 million in Nepal at Rs. 10.60 per unit.
In order to avoid this power loss, most of the transmission lines in the country including the 132 KV transmission line coming to Pokhara (Lekhnath) through Dana-Kusma and the 220 KV Kaligandaki corridor should be repaired.
Otherwise, even the projects that are being prepared for commercial production after the completion of construction will not be connected to the system and a large amount of electricity produced in the country will be wasted.
NEA will have a 1000 MW electricity reserve in the current rainy season. Even if 364 MW of the reserve is exported to India, 636 MW will be wasted.
Comment