An NEA report has said that there is a need to work out on working capital and capital investment requirements, especially in view of the ongoing construction of Chameliya, Kulekhani-3, Upper Tamakoshi and Upper Trishuli 3A projects and debt servicing of Rs 300 million development bonds. [break]
Importantly, it has also recommended cash injection through government and tariff hike. Stating that there is an urgent need to increase the tariff by at least 30 percent for all consumers beyond the life line consumption of 20 units per month, the financial restructuring committee headed by a joint secretary at the Ministry of Finance urged the government to implement the World Bank funded project on Institutional Strengthening of NEA.
In the annual budget of 2066/67, NEA falls short of Rs 6.13 billion from the total requirement of Rs 39.50 billion. NEA is expecting to meet this gap by issuing bonds worth Rs 1.5 billion and by taking more loans.
The main reasons for NEA´s losses have been identified as increasing system loss which is now about 26 percent; high operational losses associated with expansion of rural electrification, increased technical losses and theft; a high level of debt service owing to high interest rates on loans and bigger proportions of debt over equities; no tariff hike in the last 10 years and political interference in the management level.
The structural restructuring has been conceived at three levels: government, board and management.
NEA has said the government must formulate a master plan for electricity generation, transmission and distribution and assign a clear role to NEA. It also said big projects like Upper Karnali should be built as joint ventures between NEA and foreign partners.
The report proposed NEA Board be restructured with government appointing an executive chairman or the secretary of energy as its chairman. It suggested appointing CM/MD for a fixed term through competition. The report also proposed decentralization of the authority at the management level.
The report said NEA alone "cannot shoulder the entire blame for load-shedding. But a restructured organization, the report said, will make concerted efforts to reduce power cuts. The report suggested installing thermal plants on the basis of urgency.
"The restructuring has two parts. One that can be implemented by the Board and the other through amendment to the Act," Sher Singh Bhat, NEA director of systems operations, said. He also stressed on strengthening human resource and training, saying that HRD is very weak in NEA.
akanshya@myrepublica.com
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