The Nepal Electricity Authority (NEA) has proposed a 20 percent hike in electricity tariffs, hot on the heels of a similar increase last June. Last year’s price increase, which was the first in a decade, came as a big surprise. Such dramatic increases have been warranted since a mechanism for automatic adjustment of power tariffs on a yearly basis, which has reportedly been in the works for nearly a decade, is yet to see the light of the day. Such a ‘scientific’ mechanism would factor in, among other things, inflation, consumer price index and power purchase rate, for calibrated price increase rather than arbitrary jack-ups when the push comes to shove. The reason the mechanism has not come through is mostly political. While on the outside people were made to believe that NEA bureaucrats were preparing the ground for vital reforms, the reality is far grimmer. There are thousands of political appointees within the organization, all trying to serve the interests of their mother parties and often working at cross purposes. Post 1990, every political party in power has tried to make NEA its recruiting ground for new adherents. The handpicked appointees resist any reform that threatens their privileged positions. [break]
They would rather sit back and watch NEA go bankrupt rather than intervene to halt the rot in the organization. Populism has tied reformers’ hands too. Every political party in the opposition loved to demonize the parties in power of succumbing to the interests of fat-cat capitalists even when modest tariff hikes were proposed. The decision to bell the cat was taken last year because there really was no other option than either increasing the tariff or shutting down NEA, which was bleeding through its teeth. But even this is not the whole story. Up to 20 percent electricity supplied by NEA is ‘leaked’ or ‘stolen.’ Without plugging these loopholes, it would be unfair to add burden on the shoulders of the law-abiding citizens. People would also be more amenable to price hikes if they knew that increased tariffs would help end the long hours of load shedding.
There are some optimistic predictions being made: apparently, by 2014, the country can do away with power outage during the rainy season entirely. Well, Nepalis will believe it when they see a credible plan on the table. There have been far too many promises to ‘light up’ the whole country with ‘cheap and reliable’ electricity. For a country that likes to boasts of its great hydropower potential, it generates a pittance: output peaks at 700 MW in the rainy season, with the supply cut to half during the drier months. Primarily, it is the incompetent political leadership (and their cronies in the power bureaucracy) that has to be held accountable for this sorry state of affairs. Many believe it is about time Nepal abandoned its romance with hydropower and seriously started exploring other sources like solar and wind. Others put more faith in small-scale hydro projects over the gargantuan ones that promise so much but ultimately disappoint bitterly (Arun III, anyone?). This debate is unlikely to be settled anytime soon, just as the recent decision to hike tariff is unlikely to die down in a hurry.
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