Year 2020/021 NEA’s Dark Year

With an abrupt decision of then Prime Minister K.P. Sharma Oli, Kul Man Ghising, managing director of Nepal Electricity Authority (NEA), discontinued for a year. However, the year under a new management cost billions of rupees of loss to NEA

July 24, 2022, 11:38 a.m. Published in Magazine Issue: VOL. 16, No. 01, July.22,2022 (Sharwan 06. 2079) Publisher and Editor: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

If the recently published Audit Report 2022 of Nepal Electricity Authority by Auditor General is any indication, it shows how costly for the organization like NEA it was in replacing the existing dynamic and dedicated head abruptly.

Serving four years as a managing director of NEA (2016-2020), Kul Man Ghising had transformed NEA into a profitable public entity ending decades old load shedding. After taking the position of MD, Ghising had reduced the electricity leakage from 24 to 15.

However, his one year absence was costly to the institution. As he left NEA in August 2020 July and Hitendra Dev Shakya took charge as new MD, the process of NEA’s decline started. The audit period between July 2020-July2021 showed how NEA was heading to a financial collapse.

The Auditor General’s Annual Report 2022 showed that NEA suffered from high leakage, low profits and high remnant in the fiscal year of 2020-2021 (2077/078).

Submited to President Bidhya Devi Bhandari by Auditor General Tankamani Sharma Dangal, the annual report of the Office of the Auditor General (OAG) for the fiscal year 2077-78 BS (2020-21) highlighted various transaction, performance and finance related issue of various government organizations including NEA.

According to the report, all financial indicators, which were upward and positive previously, were suddenly on the backtrack causing negative results in the fiscal year of 2020-021.

According to the 59th Annual Report published on July 13, NEA’sleakage increased to 1.19 in the audit period of 2020-021 compared to the previous years. The report pointed out that the leakage was 15.99 in fiscal year 2077/079 and targeted to bring it down to 13.50. The report also pointed out NEA’s adamance to evaluate the situation hiring independent experts to improve the situation.

According to the report, NEA has made net profit of 10.05 billion rupees ( Rs.10,05,0000000) in the fiscal year (2076-077), However, NEA’s profit margin shrunk Rs. 7.68 billion (7,68,69,00000) in 2077—78.

NEA has earned Rs. 71, 2900000000 selling the electricity in the first year 2076-077 and the amount was Rs.70, 860000000 in the 2077/078 fiscal year.

In earlier fiscal year, NEA purchased electricity worth of Rs.35, 12, 0000000. However, during the same period in 2077-078, NEA purchased electricity worth of Rs.40, 850000000. This is 16.32 percent higher than the previous year. According to the report, NEA had cited reasons for declining internal production and increased the import.

According to report, NEA’s own electricity generation in the fiscal year of 2077-078 was 200.69 gigawatts hour lower than the fiscal year 2076/077. Similarly, IPP’s generation had increased by 304.22 gigawatts hour.

The report said that there are ample indications to show that NEA’s generation declined because the water was dumped in the river from the dam at night. The report said this is sheer wastage of electricity.

OAG report.jpg

The report also said that NEA was unable to refund remnant in fiscal year 2077/078 compared to 2076/077. Compared to a year ago, NEA’s remnant has increased by 13.17 percent in this period reaching the amount Rs.36.47 billion. Out of this, the NEA is yet to refund Rs.17.15 billion from 56 customers of feeder line.

According to report, NEA’s 47.08 percent of the remnant amount needs refund from the 56 customers connected to the dedicated feeder. With Rs.4.32 billion from street lights, NEA’s total remnant amount now is Rs.40.75 billion.

Despite the decision of NEA’s board of directors to collect the amount under an installment basis and direction of Public Accounts, NEA was unable to collect the money.

This report is a testimony of best financial performance of MD Ghising and after his successor’s period.

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