Speaking at the parliamentary Public Accounts Committee (PAC), Managing Director Jibendra Jha said NEA has been reeling under plethora of problems and if the situation persists NEA will cease to exist within a four-year period from now.[break]
According to the financial report prepared by NEA, it incurred a whopping loss of over Rs 5 billion in the fiscal year 2009/10, resulting in a total accumulated loss of over Rs 19 billion. Jha said NEA has been paying unjustified royalty to the government and that the higher interest rates on lending imposed by the government has further deteriorated NEA´s financial health.
"The government sells NEA the power purchased from India through Tanakpur [20 MW] and for this too the latter pays royalty to the government," he said.
The government´s inability to fully fund hydropower projects has forced NEA to depend much on the donors´ fund. Under the circumstance, NEA has to acquire resources for the donor-funded projects at higher rates and hire donor-specified consultants at higher salaries.
Jha also apprised the PAC members that the electricity tariff has not been adjusted for the last one decade and that NEA´s request for a tariff hike has fallen on deaf ears. "We have been requesting a tariff hike for the last 6-7 months, but Electricity Tariff Fixation Commission so far has been giving only assurances," he complained. "I think we have to stage a sit-in at the office of the chairman of the commission."
NEA also warned that if expansion of transmission lines continues at a snail´s pace, it will incur a loss of Rs 3 billion in five years.
PAC members, on their part, expressed concerns over electricity leakage of up to 27 percent. Of the total leakage, NEA claims 17 percent is due to technical lapses whereas 10 percent is due to pilferage. The members also expressed dissatisfaction over the slackened pace of electricity generation and the distribution of power generation licenses in an arbitrary manner. They also observed that NEA should come up with concrete plans to ease the load shedding woes.
PAC had summoned top officials of Ministry of Energy, NEA and Department of Electricity Development including minister Prakash Sharan Mahat to take stock of the current situation and discuss ways to cut down the load shedding hours. However, Mahat and MoE secretary snubbed the PAC´s call.
The next meeting is scheduled for December 13, 2010 at 11 am.
Proposal to stop PPA deals
Jha has vowed to meet NEA´s board of directors with a proposal to stop new Power Purchase Agreement (PPA) deals. He made this decision in light of the fact that NEA has already been incurring losses due to inadequate transmission line networks.
Since the PPA deal is done under ´take or pay´ policy, NEA has to pay power producers even if the former is unable to evacuate power.
Similar deal with Khimti and Bhotekoshi power projects have been bleeding NEA white. If the proposal is endorsed, many projects in pipeline, including the export-oriented ones, will be hit hard.
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