KATHMANDU: While Finance Minister Dr Swarnim Wagle introduced VAT on electricity through the current fiscal year’s budget, Energy Minister Biraj Bhakta Shrestha has said preparations are underway to reduce electricity tariffs and provide relief to consumers.
The introduction of VAT has increased electricity costs for both household consumers and industries, drawing criticism of the government led by Prime Minister Balendra Shah.
According to the Ministry of Energy, the Nepal Electricity Authority (NEA) is working on a proposal to provide electricity to consumers and industries at concessional rates following a review of existing tariffs.
The NEA formed a committee on August 13 under the coordination of its board member Anshukiran Shahi to review electricity tariffs. The committee includes representatives from the Energy Ministry, the Federation of Nepalese Chambers of Commerce and Industry, energy experts, consumer representatives and financial experts.
The committee is scheduled to meet at the ministry at 4 pm on Wednesday to discuss measures to reduce electricity costs.
Shahi said the tariff review was being considered in view of the surplus electricity generated during the monsoon season, much of which is currently going to waste.
He said the NEA has been facing losses of billions of rupees each month when electricity generated during the rainy season remains unused. The authority is therefore considering a seasonal tariff to encourage domestic consumption by offering cheaper electricity to consumers and industries.
The proposal also includes concessional rates for industries during the monsoon season. According to Shahi, discussions are underway on how lower electricity costs could translate into cheaper products for consumers.
“The meeting is being held at the ministry today to discuss how electricity costs can be reduced through a seasonal tariff,” Shahi said. “We are also discussing how industries can pass on the benefit of cheaper monsoon electricity to consumers through lower production costs. We will make a decision soon.”
Shahi said the Energy Ministry was exploring ways to provide relief to consumers at a time when the government has faced criticism over increasing taxes on electricity.
Meanwhile, Prime Minister Balendra Shah has already taken the initiative to scrap the equity tax imposed on the education and health sectors through the Economic Bill.
If the Energy Ministry’s initiative results in a reduction in electricity tariffs, it could also affect the government’s projected VAT revenue from electricity and potentially impact its budget revenue target.
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